International IP Policy

The Public Health Nightmare in Africa by Michael Wurl

    An enormous health gap exists between those that live in developing countries versus those that live in developed countries.  In this context, numerous articles have been published seeking to link intellectual property law to this public health disaster.  Two general arguments have emerged.  One side of the debate argues that the solution to this problem is for developing countries to provide strong IP laws so that developed countries feel secure transacting business in these countries.  The hope is that such investment will lead to treatments or even cures for the diseases that affect people in developing countries.  On the other side, several commentators contend that increased access to medicine is essential for developing countries.  In essence, these commentators contend that large pharmaceutical companies have monopolies on the treatments that developing nations need.  Further, because of these monopolies, companies charge prices that are out of reach of developing nations, creating a situation where profits are more important than human lives.

However, the facts here demonstrate unequivocally that this debate is a red herring that ignores the reality of public health in developing countries.  Instead of focusing on actual solutions, in particular those solutions that have been proven to be most effective, such as prevention, the debate focuses on access to pharmaceuticals to mitigate these diseases after they are contracted.  Further, it would appear that the focus on IP law has been driven by private and public actors from developed countries attempting to secure economic gains at the expense of millions of lives. 

            This paper will address the public health nightmare in developing countries by first looking at the state of public health in developing countries, particularly African nations.  The empirical evidence available demonstrates that many of the problems with public health in Africa can be traced to a poor public health infrastructure that fails to provide appropriate prevention measures.  Further, the developed world focuses on providing treatments for diseases after they are contracted instead of focusing on preventing or eradicating these diseases.  Finally, this paper will consider some possible solutions to this ongoing tragedy.  In the end, the focus on treatment rather than prevention in the developing world mimics a shift found in the developed world.  This is likely a direct result of the shift in healthcare as a non-profit venture to one of the world’s most profitable businesses.  The reality is that both developing and developed countries focus on treatment instead of prevention causing the deaths of millions.      

            I.          The State of Public Health in Africa      

The 2009 WHO World Health Statistics report included numerous comparisons that demonstrated exactly why public health is a problem in developing countries.  For instance, the maternal mortality rate in Africa was 900 deaths per 100,000 births, while in Europe the maternal mortality rate was just 27 deaths per 100,000 births.[1]  The causes of death in Africa are particularly telling.  HIV/AIDS accounts for 198 deaths per 100,000 people, Malaria accounts for 104 deaths per 100,000 people, and TB accounts for 92.6 deaths per 100,000 people.[2]  Europeans die from HIV/AIDS at a rate of 10 deaths per 100,000 people, TB caused 6.9 deaths per 100,000, and Malaria was not even considered by the WHO in Europe because of its near eradication as a cause of death.[3]  This represents a difference between Africa and Europe of 377.7 deaths per 100,000 people.  In terms of actual numbers, about 3.7 million more Africans die from these three diseases per year than do Europeans.[4]  

In a decade, 37 million people, or more, will die in Africa because of three communicable diseases that have either been eradicated in developing nations or, in the case of HIV/AIDS, have been effectively treated.  In short, these people die because they are poor and do not have access to proper health care.  Even worse, Malaria and TB was not eradicated by innovative medicines, but basic public health measures like insect control, which is far cheaper and more effective as a preventative measure than attempting to treat these diseases after they are contracted.  As is always the case, an ounce of prevention is worth a pound of cure.

The focus on prevention and health was not a novel approach.  The United Nations Millennium Development Goals focused on health and disease prevention.[5]  The Millennium Goals addressed eight areas that foster development in least developed countries.  These goals included ending poverty and hunger, universal education, gender equality, child health, maternal health, combating HIV/AIDS, environmental sustainability, and global partnerships.[6] 

Further, goal six focused on combating HIV/AIDS, malaria, and TB.[7]  A 2005 UN report indicated that there were three areas of concern regarding this goal: halt and reverse the spread of HIV/AIDS, halt and reverse the spread of malaria, and halt and reverse the spread of TB.[8]  In Sub-Saharan Africa, the spread of HIV/AIDS is stable.[9] However, instances of malaria remain high and rates of TB infection have actually been increasing.[10] 

            A.        HIV/AIDS

Three communicable diseases kill 3.7million Africans every year.  However, these same three diseases only take 123,000 lives a year in Europe.  Two diseases, Malaria and TB, have been all but eradicated in the developed world.  HIV/AIDS, which is a global problem, disproportionately affects Africans.  The country with the highest HIV infection rate in Europe, Ukraine, has a 1% infection rate (1% of Ukrainians have HIV).[11]  Compare this to Africa, where infection rates average almost 5% and in some countries, like Swaziland, Botswana, and Lesotho, 20% or more of the population have HIV.[12]  Treatments for HIV/AIDS are very effective in preventing the transmission of the disease and prolonging the lives of those who live with the disease.  However, only 30% of Africans have access to anti-retroviral treatments.[13]  People in four African countries, Namibia, Botswana, Rwanda, and Senegal have over a 50% access rate while twenty-seven other African nations have a 30% access rate.

B.                 Malaria

The mortality rate from Malaria in Africa was, on average, 104 deaths per

100,000 people.[14]  In comparison, the only country outside of Africa with a rate greater than 50 deaths from malaria per 100,000 people was Timor-Leste, with 93 deaths per 100,000 people.  The next country on the list, Papua New Guinea, has a rate of 45 deaths per 100,000 people, followed by the Solomon Islands at 30 deaths per 100,000 people.[15] 

            The most effective and cheapest measures for fighting malaria are the use of DDT and other pesticides to control the mosquito population coupled with bed nets and medications to treat the disease once contracted.[16]  During the middle of the twentieth century the World Health Organization attempted to eradicate malaria.[17] While Africa was not included in this effort, those countries that were, especially Latin America, saw rates of Malaria drop dramatically by simply using pesticides like DDT and existing medication to treat the disease.[18]   

            Despite the evidence from Latin America that Malaria can be controlled, little progress has been made in Africa.  On average, only 14% of children under five years of age sleep under an insecticide treated bed net.[19]  Availability of anti-malaria medicine was more prevalent, with an average of 36% of African children under five years of age receiving medication to treat fever caused by Malaria.[20] 

C.                 TB

In some sense, medical treatment for TB in Africa has been as successful as other

parts of the world.  This is not to say that the healthcare system in Africa was as successful as the healthcare systems in developed nations when treating Malaria overall, but that when measures are implemented in Africa those measures are as effective in Africa as they are in Europe, North America, or Latin America.  On average, TB treatment was successful in African nations 75% of the time, which is identical to the rate of success in North and South America and higher than the 70% success rate found in Europe.[21]  This statistic truly demonstrates the problem with public health in Africa; the cure for TB has been around for over fifty years, costs less than $25 per person, and when used in Africa the drug demonstrated the same level of effectiveness as found in developed nations.[22]  With TB, the problems are rather clear; there is a lack of access to existing cures for the disease because of cost, lack of access to doctors in general, and HIV/AIDS complicates the disease.[23]

II.                 The Role of Intellectual Property in the African Public Health Disaster

The debate regarding IP law and the public health problems in Africa focused on

a lack of access to medications because of their cost.  Pharmaceuticals account for one-third of some developing countries health budgets.[24]  Patents allow companies to charge prices well above actual costs.  Further, despite the undisputed need for charity in Africa, studies have shown that some drug prices in sub-Saharan Africa are actually higher than in France.[25]  Protectionism by the

United States, Germany, Japan, and Switzerland, at the behest of Big Pharma, has hindered reform by the WHO.[26]

            Examples of successes in Africa are rare but do occur.  For instance,

Zimbabwe, which was economically isolated for about fifteen years due to its aggressive move away from colonial oppression to independence, developed a domestic pharmaceutical market.[27] However, aid agencies, such as UNICEF, detested the independent Zimbabwe

pharmaceutical market, claiming that local drugs cost 40% more than those imported from Europe and the United States.[28]  The criticism was based primarily on the fact that

Zimbabwe imposed tariffs to protect domestic production.[29]  The World Bank, while allowing a 15% margin for domestic pharmaceuticals, joined UNICEF in criticizing

Zimbabwe.[30]  Instead of supporting local infrastructure, jobs, and manufacturing capacity, international organizations claimed

Zimbabwe was engaging in protectionism and advised that they should remove all tariffs on pharmaceuticals.[31] 

The result of removing these tariffs were clear; because much of the Zimbabwe pharmaceutical industry was local, removing tariffs would end not only domestic manufacturing of pharmaceuticals, but also cause a general deindustrialization of this sector in Zimbabwe.[32]  The blind application of liberalized trade policies without regard to local conditions and development goals means that domestic production, let alone innovation of new drugs, was and will remain impractical, if not impossible.[33] 

This was entirely contrary to the WHO stance on the issue, which emphasized self-sufficiency in the manufacture of essential medicines.[34]  In fact, the World Bank’s official policy is that because the world generic drug market is extremely competitive developing countries who do not already have a share of the market should refrain from entering the generic market altogether, instead insisting on dependence on existing foreign markets in developed nations.[35]

This brief overview sums up the larger economic debate regarding access to health resources; economic interests insist on liberalized trade policies and dependence on existing firms versus healthcare professionals who instead advocate self sufficiency, increased infrastructure, and increased education.  Clearly the economic argument favors strong IP law while the healthcare professionals favor domestic production of generic drugs and weaker IP laws so that developing nations can have access to new drugs faster.  

            On the other side of the debate, commentators insist that strong intellectual property rights will foster technology diffusion and innovation.[36]  Empirical studies have been presented that support the general policy; strong IP rights have in fact fostered technology diffusion and innovation in some developing countries.[37]  Neo-liberal trade policies view protectionism as a barrier to development.

In the context of pharmaceuticals, neo-liberal policy would force developing nations, which do not currently have a competitive pharmaceutical manufacturing sector, to import all drugs and refrain from imposing tariffs in order to allow domestic production to begin.  The theory embraces liberal trade policies because evidence has shown that liberalized markets, generally, increase development on an aggregate level worldwide. 

However, domestic production of pharmaceuticals has several benefits, which the WHO recognizes.  First, domestic production of pharmaceuticals means domestic control.  African nations face a variety of diseases that are not prevalent in the developed world.  Innovation in this area is less likely because capitalistic incentives for innovation are limited.  While demand may be high, the ability to pay for these medicines is very weak.  Further, domestic production can focus on diseases that are prevalent in Africa.  Finally, firms are seldom profitable or even competitive right out of the gate, even in the developed world.  Most business start-ups take several years to become competitive.  By discouraging domestic production, domestic production does not even have a chance to compete.   History is replete with stories of developed countries protecting emerging markets until they become competitive. 

III.               Analysis

The one-sized fits all approach to trade liberalization has done great violence to

Africa and many other developing countries, particularly those with the weakest infrastructure and economic base.  First, we must consider the empirical evidence regarding health in

Africa.  The data shows that three communicable diseases, HIV/AIDS, Malaria, and TB, account for the largest public health problems in

Africa.  Literally millions of people die from these three diseases in Africa while people in developed nations do not even contract Malaria or TB at any discernable rate.  Further, recent advancements in HIV/AIDS treatments can prevent the transmission of the disease and extend life indefinitely.

                        A.        The Malaria Problem

            Developed nations faced the same problems with Malaria and TB seventy years ago.  The problem with Malaria in Latin America was profound.  For instance, construction of the

Panama Canal by the French came to a halt due to Malaria and Yellow Fever.[38]  These diseases, both of which are transmitted by mosquitoes, decimated the foreign workers and engineers in the same fashion Malaria decimate Africans on a daily basis today.[39] However, the United States

took up the project after the French failure.  The American expedition fully understood that the problem could be solved by controlling the mosquito population.[40]  Using pesticides the Americans brought the mosquito population under control, effectively limiting the ability of the disease to spread.[41]  The addition of medications to treat those who still contracted the disease brought it under control and demonstrated unequivocally how this problem could be stopped.  In fact, the WHO later used similar methods to eradicate Malaria in the rest of Latin America, much of Asia, Europe, and North America.

No new drugs are needed to address Malaria.  Further, old treatments are relatively effective in treating Malaria.  Africa needs only to follow the model previously used to eradicate Malaria in the rest of the world: pesticides to control mosquitoes, bed nets to prevent transmission, and existing medications, which are available in generic form, to treat the disease once contracted.  By limiting transmission through prevention the disease can also be limited, if not eradicated, in Africa.  Despite this overwhelming evidence, little has been done to implement these tried and true methods.[42]   

            B.         The TB Problem

TB presents another interesting problem that can be solved by addressing public health infrastructure.  Many diseases endemic in tropical regions have only a limited presence in the more temperate zones where developed countries are found.  However, TB, unlike Malaria, is not one of these diseases found only in tropical areas.  As a result, cure for TB has existed for a very long time.  However, the problem is not a lack of a cure or treatment, but a lack of access to the drugs that can cure the disease. 

While TB appears to be a case where IP law might play a role, we must remember that the drugs to cure TB are not subject to patent anymore.  Generic equivalents are available, effective, and cheap.  However, the term cheap is relative.  When a person lives off of less than a dollar a day, a twenty-five dollar treatment becomes insurmountable.  Further, there is a general lack of access to doctors.  This means that many Africans contract the disease but forgo any medical treatment because there are no doctors or clinics nearby. 

Finally, TB has become a much bigger problem in Africa because of the prevalence of HIV/AIDS, and immunological disease that allows TB to be transmitted easily and prevents the human body from providing an adequate immunological response, compounding the problem.  Nearly half of those that die from TB have HIV or AIDS.  TB will remain a problem until medications are provided to those with the disease and until treatments for HIV/AIDS become available to larger portions of the African population. 

D.                 The HIV/AIDS Problem

HIV/AIDS presents the strongest case for IP law playing an important role in the

African public health disaster.  HIV/AIDS is a relatively new disease that has a 100% mortality rate.  There is no cure and while progress on a vaccination continues to move forward with some success, the only way to stop the disease are anti-retroviral medications.  In developed nations these drugs have extended the lives of HIV/AIDS patients considerably.  In fact, because these medications are fairly new, it may be the case that these medications along with wellness interventions (nutrition and exercise) could extend life indefinitely for those infected with the disease. 

            However, HIV/AIDS does have a profound effect on developed countries, meaning that companies will research and develop treatments and vaccinations.  There is no need for developing countries to find a cure.  Nor is it practical, as the disease is particularly complicated and difficult to treat.  This may be one case where dependence does make considerably more sense than attempting to engage in domestic research and development, although Africa must be a part of the debate, given the incredible impact the disease has had on the continent.  If IP law is to play a role, it will be in protecting companies from patent infringement by developing countries who cannot afford these drugs.  However, recent developments and efforts by the Bush administration led pharmaceutical manufacturers to agree to provide HIV/AIDS medications at cost, meaning that infringement would still be more expensive than simply buying the drugs from the patent holders. 

IV.              Solutions

Only one of the three major health problems in Africa has a significant

relationship to IP law, HIV/AIDS.  The solution to the Malaria problem has a lot more to do with pesticides and bed nets than medication.  In addition, effective medications for Malaria exist in generic form.  The same is true with TB; a cure has existed for fifty years.  These two problems can be solved using tried and true methods.  What Africa and many developing nations need is help funding these efforts.  The industrialization of Latin America meant that European and American corporations would need to address these major issues with communicable disease before effective markets could be established.  As a result, both of these diseases were brought under control, allowing for large workforces to become efficient and profitable. 

            However, no such industrialization occurred in Africa.  In fact, the WHO efforts to eradicate Malaria ignored Africa altogether.  Another problem exists though; access to doctors and clinics in

Africa is very poor.  The TB problem bears this out.  A cure for the disease exists and is available, but people are either too poor to buy the generic drug or simply do not have access to a doctor or clinic that actually has the drug. 

            For Malaria and TB, IP law plays almost no role in the solution to these problems.  The drugs and infrastructure needed to end these plagues exist and are no longer protected by patents.  Here, the solution requires infrastructure to deliver existing solutions.  This could be done easily but for the failure of the developed world to intervene in an effective way. 

            Rather than focus on economic liberalization and IP law, the solution to the African Malaria and TB problems is investment in public health infrastructure.  In a triage situation, policy makers must focus on the biggest problems that have solutions that are readily available.  Africa presents a typical situation where resources are very scarce.  International development efforts have focused on trade liberalization instead of public health infrastructure, directing scarce resources away from the ultimate solution.  Here, a failure to support the public health infrastructure in Africa has hindered attempts at development. 

Policy makers have put the cart before the horse.  Instead of focusing on building an infrastructure, policy has focused on economic liberalization, which has failed in Africa because of the lack of infrastructure, at least in terms of public health.  Developing nations that have seen economic development success have limited infrastructures to support economic liberalization.  For instance, while India and China have huge areas of undeveloped rural areas, they also have large coastal cities that have sufficient infrastructure to support development and industry. 

Further, there appears to be a distinct policy preference for trade liberalization, which is advocated by the WTO and World Bank, instead of infrastructure development and public health self-sufficiency, which is advocated by the WHO.  Part of this may be explained by ignorance of history and evidence based research.  The United State’s current understanding of public health is a prime example.  While all of the evidence demonstrates that investment in infrastructure and prevention is the most effective approach to public health, American public policy focuses on treatment instead of prevention.  Generally, there is at least a perception by the general public that it is easier to take a pill to treat disease rather than to prevent infection.  Further, infrastructure cannot be imported, meaning that focus on trade policy, instead of domestic infrastructure, does not address the core problem.  

            Current policy has failed to address the public health problems in Africa in a meaningful way.  Public support for “nation building” is very weak despite evidence and history demonstrating how effective infrastructure investment has been in the developed world.  Providing investment in infrastructure has spurred continued economic growth in Europe, North America, and Japan.  However, current policy takes a one size fits all approach.  In order to address the public health problems in Africa, policy makers must focus on building infrastructure in Africa instead of focusing on trade liberalization.  Once a proper infrastructure is in place, focusing on trade liberalization would make considerably more sense.  Until then, these policies will continue to fail.

            HIV/AIDS presents another problem that IP law cannot solve.  While it may very well be true that strong IP law creates economic development, the HIV/AIDS case is an outlier because the patent holders have agreed to provide treatments for this disease at cost.  Infringing on these patents would only make economic sense to a developing nation if they could manufacture the drugs cheaper than the patent holder.  Frankly, this simply is not possible.  It would actually cost more to infringe under these circumstances then simply buying from the patent holder.

V.                 Conclusion

Legal, economic, and public policy scholars continue to focus on trade liberalization as a one size fits all solution to ’s public health disaster.  These policies have failed to provide any evidence of success.  WHO policies have been marginalized and in some cases ignored despite historical success at controlling disease.  The focus on economics over medical expertise has caused this disaster, which will continue until rational policy makers are once again the dominant force.

---

[1]  World Health Organization, World Health Statistics 2009, Table 2 (WHO 2009)

[2] 

Id.

[3] 

Id.

[4]  This number was derived by dividing the population of

Africa

, 972,752,377, by 100,000 and then multiplying that number, 9,727.52377, by the difference of 331 deaths per 100,000 people.  For population statistics, see http://www.xist.org/earth/pop_region.aspx.

[5]  World Health Organization, World Health Statistics 2009, Health-Related Millennium Development Goals, http://www.who.int/whosis/whostat/EN_WHS09_Part1.pdf (last accessed Oct. 8, 2009).

[6]  United Nations, Millenium Development Goals, http://www.un.org/millenniumgoals/bkgd.shtml (last accessed Oct. 8, 2009).

[7]  United Nations Millennium Project, Investing in Development A Practical Plan to Achieve the Millennium Development Goals, http://www.unmillenniumproject.org/documents/overviewEngLowRes.pdf (last accessed Oct. 8, 2009).

[8] 

Id.

[9] 

Id.

[10] 

Id.

[11] Supra Note 5, pg. 22.

[12]  Supra Note 5, pg. 22.

[13]  Supra Note 5, pg. 25.

[14]  Supra Note 5, pg. 26.

[15]  Supra Note 5, pg. 26.

[16]  Jeffery D. Sachs, The End of Poverty Economic Possibilities for Our Time 262 (Penguin Group 2005).

[17] 

Id.

[18] 

Id.

[19] Supra Note 5, pg. 27.

[20]  Supra Note 5, pg. 28.

[21]  Supra Note 5, pg. 29.

[22]  The World Bank, Tracking Tuberculosis in Africa, http://go.worldbank.org/R75U5ESNM0 (March 21, 2008).

[23] 

Id.

[24]  Meredeth Turshen, Reprivatizing Pharmaceuticals Supplies in

Africa

, 22 J. of Pub. Health Policy 198 (2001).

[25] 

Id.

at 202.

[26] 

Id.

at 203.

[27] 

Id.

at 206-7.

[28] 

Id.

at 207.

[29] 

Id.

[30] 

Id.

[31] 

Id.

[32] 

Id.

[33] 

Id.

[34] 

Id.

at 216.

[35] 

Id.

[36]  Walter G. Park and Douglas C. Lippoldt, “Technology Transfer and the Economic Implications of the Strengthening of Intellectual Property Rights in Developing Countries”, OECD Trade policy Working Papers, No. 62, OECD Publishing (2008). Pg. 4.

[37]  Park and Lippoldt, supra note 36, pg. 4.

[38]  Supra, Note 20, pg. 197.

[39]  Supra, Note 20, pg. 197.

[40]  Supra, Note 20, pg. 197.

[41]  Supra Note 20, pg. 197.

[42]  Supra Note 20, pg. 200.

Evergreening (Novartis and the Indian Patents Act)

            Alejandro Soto

            Evergreening is a little known practice which essentially constitutes an abuse of the patent system.  This occurs when a patent holder creates a variant of the current patent, and then applies for patent protection just before the expiration of the current patent.  The new patent issues and a new patent term begins.  This practice, in effect, creates a potentially endless monopoly over the invention embodied in the original inventions and thus keeps the patent green, or in effect.  Evergreening has been an issue prevalent in the pharmaceutical industry where pharmaceutical companies create a derivative of an existing compound and attempt to patent that derivative towards the end of the existing compound’s patent term in order to constructively extend the protection of the existing compound. 

The issues revolving around evergreening consist of how a nation’s patent laws should address evergreening, whether these national patent laws are compatible with the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) and what ramifications countries face when they ban evergreening.  These questions are addressed within the context of access to medicine in the third world and the generic industry in emerging markets. 

            As a prime example, evergreening was brought to an international spotlight during the saga between the Swiss pharmaceutical giant, Novartis, and the government of India.  This case gained the worldwide attention from non-governmental agencies (NGOs) and activists, where they depicted Novartis as a greedy multinational conglomerate whose practice of evergreening deprived the world’s poor from essential medicines.  Pharmaceuticals countered by claiming that the Indian government had impermissibly narrowed the scope of patentability in order to protect its generic drug industry. 

In 1993, Novartis created a compound that was effective in treating a rare form of leukemia cancer.[1]  Novartis sought and received patent protection for its compound worldwide in close to forty countries.[2]  In India, at the time, however, patent protection for pharmaceuticals did not exist.[3]  In 1995, India became a member of the WTO, and as part of the membership they were obligated to bring their intellectual property laws to compliance with the requirements in TRIPs by January 1, 2005.[4]  In the intervening ten years, Novartis commenced commercialization of the drug in India under the name, Glivec.[5]  Specifically, Novartis filed a mailbox application for the drug in 1998.[6] The drug launched in India in the spring of 2002.[7]  In the fall of 2002, Novartis received some form of protection for their drug from the Indian government in the form of an Exclusive Marketing Rights (EMR), where Novartis was granted the exclusive distributorship and manufacturing rights of the drug in India.[8]  Before Novartis was granted the EMR, the government of India had already allowed the manufacture of Glivec by Indian generic drug companies.[9]  After the EMR was granted, Novartis contested the continued manufacturing of Glivec by the generic drug companies.[10]  The Indian government allowed three of the nine companies to continue to manufacture the drug.[11]  In 2005, the time came for India to be TRIPs compliant with its intellectual property laws and the Indian Patents Act was put in force.[12] 

Soon thereafter, Novartis applied for patent protection in India for an improvement to Glivec.[13]  The Indian Patent Office rejected the patent application and cited Section 3(d) of the Indian Patents Act.[14]  Novartis then appealed the decision of the patent office and then took their case to the courts of India.[15]  They challenged the reasoning of the Indian Patent Office, the constitutionality of section 3(d) of the Indian Patents Acts and the Indian Patents Act’s compatibility with the WTO’s TRIPs requirements.[16] 

The Indian Patent Office reasoned that the invention in the patent application did not offer increased efficacy.[17]  In essence, they argued that Section 3(d) of the law prohibited evergreening of patents by barring applicants from patenting the same or equivalent inventions twice.[18]  Novartis offered its arguments on the distinctions between the original drug and the improvement and the fact that their improvement had been patented in thirty-six countries around the world.[19]  More importantly, however, Novartis argued that Section 3(d) was unconstitutional for being arbitrary and vague and Novartis argued that the section conflicted with TRIPs requirements.[20]  The court finally held that the section was indeed constitutional and relied on contract law principles of common law to uphold the patent statute.  In regard to section 3(d)’s compatibility with TRIPs, the court withheld opinion for lack of jurisdiction, holding that the WTO was the proper venue to address such a contention.[21]  On its face, however, it doesn’t seem that section 3(d) runs afoul of TRIPs, much less when considering the Doha Declaration that came years later.    

Throughout the case, Novartis faced stiff protests from advocates calling for them to withdraw their case.  These advocates argued that evergreening this drug and not allowing a country to protect itself from evergreening would serve to deprive the poor from medicines in the name of profits.  Novartis countered by noting that their Glivec International Patient Assistance Program (GIPAP) provides Glivec to ninety-nine percent of the patients who need the drug.[22]  Generally, Novartis claimed that a lack of access to drugs in the third world was not simply caused by patents but a much more complex problem involving infrastructure and logistical obstacles.[23]  For this contention, they cite the fact that India has the highest prevalence of HIV/AIDS in the world, India has the biggest generic drug industry and still only seven percent of those afflicted have access to antiretroviral therapy.[24]  Furthermore, Novartis claimed that India’s rejection of its patent application and the purpose of section 3(d) was more motivated by the protection of India’s own generic drug industry than to prevent evergreening.[25]  Regardless of the alterior motives of the parties involved or the depictions of parties by the opposition, however, the specter of evergreening was highlighted in this case. 

For its case, the Indian officials contended that holding section 3(d) unconstitutional would allow for the potentially endless patenting of the same invention.  This result would impermissibly lower the standard for improvements on patents.  This would facilitate the deprivation of drugs to the world’s poor.  Although, infrastructure and logistical issues contribute to the lack of access to medicines, they are merely small factors.  Patent protection is the major cause of the barrier.  At some point, an invention is to be dedicated to the public.  That is the agreement between a government and the patent applicant.  For this to occur the patent must end and countries should be allowed to set significant thresholds for what constitutes a patentable improvement.

The mere fact that a patent applicant, such as Novartis, can attack an anti-evergreening statute for being void for vagueness raises whether a country is able to and whether this type of statute unfairly prejudices innovator’s ability to improve on patented inventions.  Evergreening is widely-accepted as an abuse of the patent system.  The United States, which is a developed, WTO member-country, anti-evergreening statutes are in place to combat this practice in the form of obviousness double patenting provisions in the law and regulations.[26]  This statute stands constitutional in the face of the US constitution, which similar to the Indian Constitution, also holds unconstitutional laws that are arbitrary and void for vagueness.  The American provisions for evergreening also hold up with regard TRIPs.  Granted that the United States and India hold significantly different places in the world of development, but these differences do not justify why one countries anti-evergreening statutes are more permissible under their respective constitution and under the same international agreement. 

Another issue that arises with regard to anti-evergeening statutes is whether foreign direct investment (FDI) is hampered the statutes.   Anti-evergreening measures serve to narrow the scope of patentability and as a result may discourage foreign pharmaceutical companies from setting up shop in a country for fear that once they have patent protection, they will not be able to attain protection for even valid improvements, which will enable generic manufacturers to produce the drug and the improvements thereon.  In fact, as a result of the Indian court’s ruling, Novartis decided to move a research and development branch out of India and into China, which is India’s competitor in terms of FDI from the developed world.[27]  Novartis officials went to the extent to warn that the ruling would signal to many foreign companies that going into India is too risky and it is much more favorable to go to a country like China.[28]  Another major cause for concern for India, however, is that now that India has the largest generic drug manufacturing industry the natural progression leads India into the innovation side of the drug industry.  Anti-evergreening statutes or statutes limiting patentability may need to be amended or done away with altogether in order to foster and protect the innovation that is likely to come to India.

While both of these negative implications to enforcing anti-evergreening statutes are plausible, the laws can be tailored to strike a balance of intellectual property rights strong enough to foster innovation at home and not drive away foreign direct investment.  This balance has been struck in many developed countries around the world and India’s population of more than one billion will continue to be a market to tempting to pass up despite anti-evergreening measures.  Anti-evergreening statutes have varying forms and thresholds throughout the world, it is certainly under their purview to enact such laws, which are accepted as constitutional and do not violate TRIPs. 

---

[1] http://www.novartis.com/downloads/about-novartis/glivec-history-india.pdf

[2]

Id.

[3]

Id.

[4]

Id.

[5]

Id.

[6]

Id.

[7] http://www.novartis.com/downloads/about-novartis/glivec-history-india.pdf

[8]

Id.

[9]

Id.

[10]

Id.

[11]

Id.

[12]

Id.

[13] http://www.novartis.com/downloads/about-novartis/glivec-history-india.pdf

[14]

Id.

[15]

Id.

[16]

Id.

[17] http://spicyipindia.blogspot.com/search?q=novartis

[18] Section 3(d): the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere new use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

[19] http://www.novartis.com/downloads/about-novartis/glivec-history-india.pdf

[20]

Id.

[21]

Id.

[22]

Id.

  While the statement sounds impressive, this Glivec treats a rare cancer that afflicts approximately 6200 people in

India

. 

[23] http://www.novartis.com/downloads/about-novartis/facts-vs-fiction-india-glivec-patent-case.pdf

[24]

Id.

[25]

Id.

[26] MPEP section 804

[27] ICTSD, Novartis Patent Challenge Dismissed in

India

, 11 Bridges Weekly Trade News 29, 5 September

2007, available at: http://www.ictsd.org/weekly/07‐09‐05/story3.htm (last visited: 20 September 2007).

[28]

Id.

  On a side note, the Novartis official’s statement may not hold much credibility because

China

’s troubles in enforcing its intellectual property laws are well documented.

An Alternative to Patents: Why a Combination of Prizes and Grants Could Work Wonders for Public Health

by Eric Rakestraw

Many nations in the developing world are currently facing public health crises.  Diseases such as malaria, virtually unheard of in the developed world, run rampant through sub-Saharan Africa and other tropical regions.[i]  Although many of these diseases affect millions of people worldwide, the current system of international intellectual property law – particularly patents – provides little incentive for pharmaceutical manufacturers to engage in the costly, long-term research necessary to develop effective treatments.  And where effective treatments do exist, they are often unavailable to citizens of developing nations.[ii]

As a supplement to the current patent system, this paper proposes a combination of research grants and incremental, milestone-based prizes to incentivize firms to conduct research on diseases largely ignored under the current regime.  Because any firm participating in the proposed system would be required to release its invention into the public domain, generic drug manufacturers would be enabled to provide low-cost treatments to those in the developing world.  In particular, this proposal would address the two main failures of the current patent system in this area: its failure to incentivize research into the diseases of poverty, and the drawbacks associated with granting monopoly rights to inventors.

First, any potential solution to this crisis must address the shortcomings of the current patent system in promoting research and development for drugs that treat the diseases of poverty.  In most cases, the free market provides a highly efficient method of allocating economic resources.  And by providing a time-limited monopoly over the production and distribution of inventions, the patent system attempts to harness the efficiency of the free market.  In particular, it encourages firms to develop those treatments with the highest potential for economic return.  In most cases, the drugs with the greatest potential for profit are also those with the greatest potential benefit to society.

But for drugs that address diseases of poverty – which affect extremely large numbers of extremely poor people – the purely market-based approach breaks down.  Because the potential purchasers of such a drug (even collectively) lack sufficient economic wealth, there is little potential for a drug manufacturer to profit, or even to fully recoup the high research and development costs that would likely be involved.[iii]  In these situations, even a drug that would provide a huge benefit to society – for example, a simple, safe and effective treatment for malaria[iv] – won't be adequately incentivized by the current system of patent protection.  In contrast, many drugs, such as treatments for hair loss, provide little societal benefit but are highly incentivized by the patent system, due to the relatively high economic wealth enjoyed by the targeted consumer group.

Second, to truly be effective at combating diseases of poverty, any proposed system should ensure that drugs, once they come to market, are available in the developing world at near-manufacturing cost.  The current patent system clearly fails in this regard; with a monopoly over production and distribution of a drug, any rational firm will seek to maximize its profits by charging the highest price the market will bear.  In contrast, if there were no grant of exclusive marketing rights, drug prices would act like commodities, and would generally come to rest slightly above the marginal cost of production.  The challenge, then, is to develop a system that allows manufacturers to recoup their research and development costs without granting any monopoly power once the drug comes to market.

In light of these concerns, the optimal solution involves a combination of two widely-circulated proposals: research grants to “push” the initial research, and government-funded prizes[v] to “pull” the researches toward the desired goal.[vi]  Such a push/pull combination would capture the best aspects of each system, while mitigating many of the drawbacks that befall either approach individually.  In addition, replacing the standard winner-take-all prize proposal with an incremental system of milestone-based prizes would help to further increase the system's efficiency and overall effectiveness.

Supplementing a prize-based system with research grants would help to mitigate many of the major drawbacks associated with offering prizes alone.  For example, one of the major issues with a purely prize-based system is risk: although the winning firm has the potential to earn a healthy profit, unsuccessful competitors would be left with nothing – resulting in a substantial loss once the sunk research and development costs are factored in.  Where research costs are high, the substantial risks associated with a winner-take-all prize system might prove too much for investors to swallow, dooming the prize system in the process.

But a prize system backed with research grants could help to alleviate much of this risk.  Ideally, the size of research grants would be carefully balanced: large enough to meaningfully offset the risky cost of drug development, but small enough to retain the benefits and incentives of a results-based prize system.  And if the value of the research grants remain small in comparison to the prize being offered for success, then many of the drawbacks associated with a standalone research grant system will also be cured.[vii]  Researchers would no longer have the temptation to drag their research out as long as possible, because they would be incentivized by the potential for much higher profits if they were the first to reach the prize target.  Additionally, with relatively small grant sums (in comparison to the prize amounts), researchers would have much less incentive to exaggerate the true potential of their research proposals; instead, they would be drawn to those prizes with the highest chance of actual success.

In this way, a hybrid prize/grant system still retains many of the free-market benefits sought to be harnessed by the current patent system.  Many researchers will naturally be drawn to those prizes with the highest chance of immediate success, resulting in a rapid pace of innovation.  At the same time, other researchers would be drawn to prizes that, although more difficult to achieve, carried a higher payout for success.  These prizes would presumably focus research efforts on those innovations with the highest societal benefit (which would correspond to the highest financial rewards for the prizewinners).

Additionally, one common criticism of prize systems is the perceived difficulty of setting the financial award to an optimal amount.[viii]  If the award is set too low, then the prize target might languish, with little or no research attention directed its way.  If the award is set to high, then society will have effectively “overpaid” for the innovation.  And without a crystal ball, it is often difficult – if not impossible – to predict the cost of research required to develop a drug ahead of time.

These concerns, while completely valid for a purely prize-based system, can be adequately addressed through the supplemental use of research grants.  Any firm applying for a research grant would be required to indicate which prize, if any, it was attempting to pursue.  This would provide the government with immediate, real-time feedback regarding the amount of research being conducted towards any particular goal.  If a prize attracted too few grant applications, the government could simply use that information to increase the prize amount (or lower the target criteria) to compensate – no crystal ball required.[ix]

In addition, many prize-based systems have been criticized for their winner-take-all nature.  Because the first drug to meet the targeted criteria wins the prize, critics argue that prize systems would lead to the quick production of mediocre drugs that barely meet the minimum specifications.[x]  Under these systems, some critics argue, there would be no incentive to continue research and produce higher-quality, more effective drugs.[xi]

But that conclusion simply begs the question: why wouldn't a prize system be set up in a way that achieves both goals – developing a reasonably effective drug as quickly as possible, while still incentivising improvements to quality and efficacy down the road?  Indeed, the best approach appears to be a multi-tiered prize system: smaller amounts for lower levels of efficacy (which are more easily attainable), with increasingly larger amounts for more highly-effective drugs to be developed later on.   Ideally, prize amounts for each milestone would be published at the start, enabling some firms to reach quickly for the low-hanging fruit, while others could focus on the more lucrative prizes at the top of the quality ladder.

Such an approach would also provide incentives for the runners-up (firms that lost the race to the initial prize) to continue their research and development – in contrast to the standard single-prize, winner-take-all model.  For example, a firm developing an antiviral agent might take a research path that fails to win the initial prize for 80% effectiveness, but nevertheless produces the first drug to win the prize for 95% efficiency several months down the road.  And with multiple opportunities to profit, investors would likely feel more comfortable taking on the risks inherent in drug research and development.

The combination prize/grant system described above could peacefully coexist with existing patent systems.[xii]  In nearly every case, the patent system efficiently provides incentives for drug manufacturers to engage in research that provides benefit for society; the situations where a market failure occurs (and the prize/grant system is needed) represent only a small minority.  But the proposed system would implement one important change to the patent system: any inventor who either received grant money or claimed a monetary prize would be required to relinquish any patent claims over the invention, instead releasing the work into the public domain.  This would ensure that the goal of the prize/grant system – ensuring open access to medicines for the benefit of the public – would be met.

For some, it may be tempting to view the current patent system as a barrier to public health, standing in the way of truly beneficial innovations that might improve the lives of those in need.  And it is easy to understand this frustration, particularly when pharmaceutical companies spend vast sums of money simply on the marketing of lifestyle drugs (such as hair loss prevention) in wealthier nations, but citizens in the developing world lack access to medications for diseases like tuberculosis and malaria.

But the focus of this proposal is not to replace – or even to discourage the use of – the existing patent system.  Rather, the proposed combination of research grants and incremental prizes would simply provide an effective tool to supplement the patent system in those areas where the market fails to provide sufficient incentive for development.[xiii]  Inventions developed under the grant/prize system would be released into the public domain, enabling open access to low-cost medicines and treatments and encouraging research on diseases that would otherwise be overlooked by the current regime.

---

[i]  Julian Morris, Philip Stevens & Alec van Gelder, International Policy Network, Incentivising research and development for the diseases of poverty 5 (2005) (“Most of the disease burden in low-income countries finds its roots in the consequences of poverty, such as poor nutrition, indoor air pollution, and lack of access to clean water, proper sanitation and health education.”).

[ii]  See id (“nearly all of these deaths are either treatable with existing medicines or preventable in the first place”).

[iii]  See Joseph Stiglitz, Project Syndicate, Prizes, Not Patents (May 25, 2007), available at http://www.project-syndicate.org/commentary/stiglitz81 (last visited October 8, 2009) (“It is a matter of simple economics: companies direct their research where the money is, regardless of the relative value to society. The poor can’t pay for drugs, so there is little research on their diseases, no matter what the overall costs.”).

[iv]  For a discussion of the malaria epidemic plaguing the developing world, see Morris, Stevens & van Gelder, supra note 1, at 5-6.  Additionally, some poverty-based diseases currently lack any form of effective treatment at all.  Id at 7 (listing African Trypanosomiasis, leishmaniasis, Chagas disease and Denuge fever as diseases lacking safe or effective treatments).

[v]  Although funding prizes for pharmaceutical developments is an expensive proposition, many governments with substantial public-health programs (including the United States) could actually come out ahead financially, due to the lower cost to consumers of the resulting drugs.  See Stiglitz, supra note 3 (“Since governments already pay the cost of much drug research directly or indirectly, through prescription benefits, they could finance the prize fund, which would award the biggest prizes for developers of treatments or preventions for costly diseases affecting hundreds of millions of people.”)

[vi]  For a general discussion of “push” and “pull” techniques, see Morris, Stevens & van Gelder, supra note 1, at 12-16.

[vii]  For a concise list of criticisms of research grants, also known as “direct funding” proposals, see Morris, Stevens & van Gelder, supra note 1, at 12.  These criticisms include: the difficulty of determining in advance the amount of total funding required; the risk of overspending as previously unanticipated obstacles are encountered; and the temptation of project leaders to exaggerate the likely cost of research in order to secure additional funding.

[viii]  See, e.g. James Love, Knowledge Ecology International, The role of prizes in stimulating R&D 2 (2007) (“If prizes replace prices as the relevant incentive, how does one determine the amount of the prize . . . ?”).

[ix]  The Knowledge Ecology International proposal discusses a method of setting appropriate prize amounts through evaluating the prices and trade information for existing medical products.  Id.  Although it is unclear precisely how this calculation would be performed, the system proposed in this paper is able to avoid this dilemma entirely.

[x]  Cf. David Dobbs, Run-AMC: The latest idea in vaccine funding won't cure AIDS and malaria, Slate, Dec. 29, 2005, available at http://slate.com/id/2133355/pagenum/all/print (last visited October 8, 2009) (discussing the drawbacks of Advance Market Commitments, a variation on the standard prize-system proposal).  According to Mr. Dobbs, “[t]he winner-take-all nature of AMCs and the long path of drug development . . . could allow mediocre drugs to capture most AMC rewards.”  Id.

[xi]  Id (“A fresh round of AMC funding could be offered for a second, better vaccine. But companies that lost out the first time couldn't count on new money, so, until it appeared, development of potentially superior vaccines could stall. The basic flaw is that AMCs tend to attract easy solutions to disease and discourage more ambitious ones.”).

[xii]  Some other proposals, such as that from Knowledge Ecology International, also recommend a prize system as a supplement to the existing patent law.  But those proposals fail to include prizes in combination with research grants, and do not mention the tiered milestone-based prize structure advocated here.  See, e.g. Love, supra note 8, at 1.

[xiii]  Indeed, the prize system would be effective only in those areas where the public health needs are already well known (and reasonable prize milestones can be set).  See Stiglitz, supra note 3 (“For innovations that solve problems or meet needs that have not previously been widely recognized, the patent system would still play a role.”).

Counterfeit Medicines- A Global Threat to Public Health

                                                                                                Tina Shah

Counterfeit medicines are an alarming threat to global health, and the risks they pose have been largely underestimated to date.  The range of counterfeit products is extremely broad and the trends indicate that counterfeiters no longer confine their activities to luxury goods but increasingly are exploiting consumer goods, including everyday items such as baby food, medicines, cosmetics, aircrafts and vehicle parts. Counterfeiting of medicines is a lucrative business due to high demand and low production costs. When prices of medicines are high and price differentials between identical products exist there is a greater incentive for the consumer to seek medicines outside the normal supply system. Medicine counterfeiters are extremely flexible in the methods they use to mimic products and prevent their detection.[1] This is not only illegal but constitutes a serious threat to public health and safety since counterfeit drugs are not subject to safety checks. No area of the world is unaffected, but mounting evidence shows that the problem is disproportionately severe in developing and emerging-market countries, which also have the highest burden of infectious diseases. Thus, today, the production of substandard and fake drugs is a vast and underreported problem.

Countries have the primary responsibility both in stopping criminal manufacturing and distribution and in protecting their citizens from counterfeit products, but multilateral organizations such as the World Health Organization (WHO) have taken steps towards aiding countries to tighten their regulatory controls. There is no universal definition of counterfeit drugs, and the legal definitions vary among countries. WHO defines a counterfeit pharmaceuticals product as a product that is deliberately and fraudulently mislabeled with respect to identity and/or source. The definition applies to both branded and generic products. According to WHO definition, counterfeit products may include products with correct ingredients, wrong ingredients, without active ingredients, with the incorrect quantity of active ingredient or with fake packaging.[2] The factors facilitating the occurrence of counterfeit drugs vary from country to country. However, the most common factors are considered to be: lack of legislation prohibiting counterfeiting of drugs, weak criminal sanctions, weak or absent national drug regulatory authorities, weak enforcement of drug laws, shortage or erratic supply of drugs, lack of control of drugs for export, trade involving several intermediaries and free trade zones, sale of drugs over internet, corruption and conflict of interest. [3]

A WHO survey of counterfeit medicines reports from 20 countries between January 1999 and October 2000 found that 60 percent of counterfeit medicines cases occurred in poor countries and 40 percent in industrialized countries. The largest numbers of reports are related to antibiotics, antiprotozoals, hormones and steroids.[4] The problem is more pronounced in countries where the manufacture, importation, distribution, supply and sale of drugs are less regulated and enforcement is weak.[5] The number of counterfeit drug cases being investigated by the U.S. FDA has quadrupled from an average of five per year in 1990s to about 20 per year recently.[6] 

In wealthier developed countries, counterfeiting most frequently affects "lifestyle drugs" such as hormones, steroids, erectile dysfunction, and anti-allergy medicines. In May 2003, nearly 20 million doses of fake Lipitor, a cholesterol-lowering medication, had to be pulled from U.S. pharmacies.[7]  Altogether, because wealthy countries (i.e. Australia, Canada, Japan, New Zealand, and most of the European Union and the USA) have stricter regulatory mechanisms, and since most patients in wealthy countries can afford branded medicines, counterfeits account for less than 1 percent of the market value, although 50 percent of Internet sales are estimated to be counterfeit.[8]

Counterfeiting is greatest in those regions where medicines regulatory and enforcement systems are weakest. Many reports have shown that the prevalence of substandard and counterfeit drugs is more than 30 percent in countries where drug regulation is ineffective for example in Asian and African countries.[9] In poor countries, essential and life-saving drugs used to treat infectious disease such as tuberculosis and malaria are often the drugs under threat.[10] In south-east Asia, estimated prevalence of counterfeit Artesunate for malaria is 33-53 percent.[11] It appears that in all those countries where access to modern medicines is poor, incidence of counterfeit medicines, ranging from anti-malarial, anti-hypertensive, anti-tubercular, anti-retroviral to cardiovascular and other life-saving and life-style drugs are higher.[12] Paying for medicines can consume a significant proportion of individual or family income.[13] Some patients in developing countries therefore seek medicines that are sold more cheaply. Since the burden of these diseases is greatest in these countries, there is often a frantic demand spurring the sale of counterfeit drugs on the black market despite poor quality and even appearance.[14] Another example is, for many countries of the former Soviet Union, counterfeit medicines are estimated to exceed 20 percent of market value.[15]

 However, developing countries are not only markets for counterfeit drugs, but they also produce the fakes, according to a report from the International Policy Network (IPN).[16] Deliberately and fraudulently misidentified shipments or mislabeled products, however, thwart customs and regulatory systems designed to protect patients and monitor drug safety, efficacy, and quality. The primary offenders are China and India, where oversight is weakest. China had five hundred illegal medicine factories in 2001, a number which has since increased. According to the IPN report, about 15,000 manufacturers of copies operate in India, and while the majority are legitimate, even if their drugs are substandard, "a small minority are “fly-by-night'” operations that do not comply with proper regulatory standards."[17] Most of the counterfeit medicines in Nigeria, for example, originate in India, which led the authorities to threaten to ban the import of all drugs from India in 2003.  Therefore, enough data is available to establish that counterfeit drugs are posing a growing menace to humanity.

In order to control the global counterfeiting problem, it is necessary to address the forces which encourage the manufacture and supply of counterfeit medicines.  The basis of the TRIPS agreement was to harmonize intellectual property rights internationally; however the goal was only partly achieved by TRIPS. While the developed countries were able to get the minimum standards for the IP regimes in different countries, the developing countries could use the TRIPS flexibilities to suit their needs. “However, the only way for aggrieved countries to enforce breaches of the TRIPs agreement is through trade sanctions.”[18] This is often not a particularly sought-after option, because trade sanctions hurt both parties, in that the offending country will lose needed revenue, while the aggrieved party will lose economic benefits of importing goods.[19] “To the extent that employment falls in the offending country, more people may end up with smaller disposable income and thereby more likely to purchase cheaper counterfeit medicines.”[20] Second, in the post-TRIPS era, one has seen the pressure by the developed countries and the pharma multinational corporations on developing and least developed countries to give up the TRIPS flexibilities and in fact to introduce TRIPS-plus measures either through bilateral agreements or free trade agreements.  All these measures have the effect of not only nullifying the TRIPS flexibilities but also will enhance monopolies.

Consequently, forming an accurate picture of the extent of counterfeit medicines is very difficult. One of the many obstacles in overcoming the problem of counterfeit medicines includes the absence of deterrent legislation in many countries. Since there is no fear of being apprehended and prosecuted, counterfeiters are in turn encouraged to continue their dishonest practices. Currently the penalties do not match the crime and therefore are not sufficient deterrent. There is also lack of a dedicated work force to handle the problem; also no uniform international obligations like a specific treaty exists to tackle the problem. [21] Also, an inability to settle intellectual property rights disputes and weak intellectual property protection leads to occurrence of more and more counterfeit cases in developing countries.

First, there is a lack of proper information exchange from pharmaceutical companies and governments in certain cases. Many pharmaceutical companies and governments are reluctant to publicize the problem to health staff and the public, apparently motivated by the belief that the publicity will harm the sales of brand-name products in a fiercely competitive business. This attitude does not only obstruct the required action but indirectly helps improper behavior to flourish. The WHO has received no reports of counterfeit drugs from member countries since 2002, and it received only 84 reports between 1999 and 2002.[22] [23] Likewise as a starting point, adherence to good manufacturing practices and effective supply chain management can ensure product quality and will also curb the circulation of counterfeit product.[24] Therefore, all stakeholders in pharma companies should join hands to address this public health issue, leaving aside petty commercial interests, be it generic companies or research and development based ones. Otherwise criminals will continue to run to their banks, more often than ever before, with sacks full of money from this illicit trade, at the cost of the innocent patients.

Second, another important obstacle to surmount is a renewal of the international consensus on combating the trade in counterfeit medicines. Since the nature of counterfeit drugs is a global and persistent problem, it can only be combat by international collaboration. During February 2006, at the WHO international conference on “Combating counterfeit drugs: Building effective international collaboration” held in the Rome, it was declared that the WHO should lead the establishment of an International Medical Products Anti-counterfeiting Taskforce (IMPACT) of governments, non-governmental and international institutions aimed at encouraging and coordinating anti-counterfeiting initiatives.[25] IMPACT comprises all 193 WHO member states on a voluntary basis and includes international organizations, enforcement agencies, national drug regulatory authorities, customs and police organizations, non-governmental organizations, associations representing pharmaceutical manufacturers and wholesalers, health professionals and patients’ groups. These groups have joined to improve coordination and harmonization across and between countries so that the production, trading and selling of fake medicines will cease. To accomplish this mandate, IMPACT has been focusing on the following five key areas: legislative and regulatory infrastructure, regulatory implementation, enforcement, technology and risk communication.

In addition, on February 18, 2004, U.S. FDA issued a report entitled “Combating Counterfeit Drugs: A Report of the Food and Drug Administration.” This report has identified six critical measures to combat fake drugs. This includes securing the actual drug product and its packaging, securing the movement of the product through drug distribution chain, enhancing regulatory oversight and enforcement, increasing penalties for counterfeiters heightening vigilance and awareness of counterfeit drugs and increasing international collaboration.[26] The U.S. FDA has also recommended the use of Radio Frequency Identification (RFID) tags by 2007; the drug supply chain in the U.S. would be RFID-secure by this time frame.

The international coalition should work toward consumer awareness and to educate the end users to differentiate between genuine and fake versions. Consumers should be encouraged to report any deficiency in improvement of their health status or any adverse reaction observed by them to the physician or health care worker immediately. Dedicated websites should also be established to spread the message among the educated masses especially the internet users. Media should play an important role in making the people vigilant about the seriousness of the problem.

Finally, the variety of these sources, and the different methods used to produce reports and studies, make compiling and comparing statistics a difficult task. Current sources of information include reports from national medicines regulatory authorities, enforcement agencies, pharmaceutical companies and nongovernmental organizations, as well as ad hoc studies on specific geographical areas or therapeutic groups.[27] Therefore, the WHO established a Rapid Alert System for combating counterfeit medicines, where cases of counterfeit medicines can be reported through the system by using an electronic reporting form. Alternatively the reports can be submitted by other means like e-mail or fax to the secretariat, which immediately incorporates the information into the system. The system transmits information on cases of counterfeit medicines in an effort to alert authorities so that they can take timely action. Furthermore, many research based companies are working through the Pharmaceutical Security Institute (PSI), a counterfeit intelligence forum that conducts worldwide investigations. Information on illegal activity obtained by PSI is provided to governments and international agencies, which are responsible for proceeding against counterfeits.[28] In a similar initiative in USA, pharmaceutical industry announced a voluntary program in which companies agreed to notify the FDA’s Office of Criminal Investigations of suspected counterfeiting.[29]

In the end, the battle with counterfeit medicines requires collaboration, at national, regional and international levels involving all stakeholders including health professionals, patients, manufacturers, distributors, lawmakers and law enforcement agencies. Lack of suitable legislations and regulations has encouraged counterfeiters to continue their practices. Various countries where the severity of counterfeiting is more, should harmonize stringent legislations and regulations. Counterfeit drugs are making their presence felt everywhere causing huge social and economic costs, besides undermining the confidence of the common man on health care system. So there is an urgent need to combat the problem. There is no simple solution or remedy that can be applied to do away with counterfeit medicines nor can the problem be solved by an individual company or government. Therefore, measures that are needed without delay include a business plan for pharmaceutical companies to address the growing problem, a strong political will of all participating countries, efficient regulatory environment, enforcement of rules and law and international cooperation.

---

[1] WHO Fact Sheet, "Substandard and Counterfeit Medicines," November 2003, (http://www.who.int/mediacentre/factsheets/2003/fs275/en/)

[2] Counterfeit drugs: Guidelines for development of measures to combat counterfeit drugs. Geneva, World Health Organization, 1999 (WHO/EDM/OSM/99.1)

[3] Public Health, Innovation and Intellectual Property Rights, A report of the Commission on Intellectual Property Rights , Innovation, and Public Health, April 2006.

[4] Substandard and counterfeit medicines. Geneva, World Health Organization, Fact Sheet No. 275, 2003 (http://www.who.int/mediacentre/factsheets/fs275/en/print.html).

[5] Counterfeit and substandard  drugs in Myanmar and Vietnam- Report of study carried out in cooperation with Government of Myanmar and Vietnam. Geneva, World Health Organization, 1999 (WHO/EDM/QSM/99.3).

[6] Combating counterfeit drugs: A report of the Food and Drug Administration. Rockville, U.S. FDA, 2004. (http://www.fda.gov.oc.initiatives/counterfeit/report02_04.html.)

[7] International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), "Counterfeit Drugs: A Global Health Risk," Geneva Pharma Forum, February 4, 2004.

[8] WHO, "WHO and Partners Accelerate Fight against Counterfeit Medicines," news release, November 15, 2006, (http://www.who.int/mediacentre/news/releases/2006/pr69/en/index.html)

[9] WHO Press Release, May 3, 2005. (http://www.who.int/mediacentre/news/releases/2005/pr17/index.html).

[10] WHO Fact Sheet, "Substandard and Counterfeit Medicines," November 2003, (http://www.who.int/mediacentre/factsheets/2003/fs275/en/)

[11] Give Info On Counterfeit Drugs, Get Rewarded, India, Economic Times India, July 23, 2009.

[12] Id. 23-24

[13] WHO Fact Sheet, "Substandard and Counterfeit Medicines," November 2003, (http://www.who.int/mediacentre/factsheets/2003/fs275/en/)

[14] European Generics Medical Association (EGMA), "Position Paper on Anti-Counterfeit Policy" (EGMA, Geneva, April 2007), (http://www.egagenerics.com/doc/ega_anticounterfeitpolicy_position.pdf).

[15]  WHO Fact Sheet Counterfeit Medicines (http://www.who.int/medicines/services/counterfeit/CfeitsFactSheetJuly09.pdf)

[16] Julian Morris and Philip Stevens, Counterfeit Medicines in Less Developed Countries: Problems and Solutions, International Policy Network, 2006  (http://www.fightingdiseases.org/pdf/ipn_counterfeit.pdf)

[17] Id. 4

[18] Id. 7

[19] Id 7

[20] Id 7

[21] Charatan Fred. Fake prescription drugs are flooding the United States. June 2001

[22] Gibson L., Drug regulators study global treaty to tackle counterfeit drugs. BMJ, 2004 drugs:

[23] Robert Cockburn et al., The global threat of counterfeit drugs: Why industry and Governments must communicate the dangers. PLoS Medicine, 2005

[24] Public Health, Innovation and Intellectual Property Rights. A report of the commission on intellectual property rights, innovation and public health, April 2006.

[25] Combating counterfeit drugs: Building effective international collaboration. Declaration of Rome, WHO international conference, February 18, 2006

[26] Combating counterfeit drugs: A report of the Food and drug administration. Rockville, U.S. FDA, 2004

(http://www.fda.gov/oc/initiatives/counterfeit/report02_04.html)

[27] WHO Fact Sheet Counterfeit Medicines (http://www.who.int/medicines/services/counterfeit/CfeitsFactSheetJuly09.pdf)

[28] Pharmaceutical Security Interest, (http://www.psi-inc.org/about.cfm)

[29] U.S. Food and Drug Administration. Protecting consumer from counterfeit drugs, FDA consumer magazine

Preventing Pharmacy Hijacking While Wal-Mart Guards State Secrets: The ACTA Negotiations

                                                     by Kelly Garza

ACTA = ANTI-COUNTERFEITING TRADE AGREEMENT

                In 2006, the United States partnered with Japan to propose a multilateral treaty aimed at stopping the worldwide epidemic of counterfeit items, and as of June 2008 when the formal negotiations began, more than 27 nations were participating.[1] The purpose of this Anti-Counterfeiting Trade Agreement (ACTA) is to decrease the amount of counterfeited and pirated goods making their way into the market by getting more cooperation from both developed and developing nations.[2]

Although discussions are on-going and very little information is publicly available, it is known that ACTA will include standards to enforce intellectual property (IP) rights, strengthen the underpinnings of existing intellectual property protections, and fortify the enforcement measures themselves.[3] ACTA will be focused on counterfeiting and piracy that largely impact large scale commerce, not individual citizens, and will include civil and criminal enforcement mechanisms as well as border control measures.[4] ACTA will have a very broad range of coverage and will include everything from counterfeited drugs and handbags to pirated movies videotaped in a movie theatre. It is rumored that the negotiators of ACTA have been required to sign non-disclosure agreements over concerns that any part of the negotiation information may be made public.[5]

            Negotiations of ACTA are by invitation only, and so far, it has been the wealthiest nations with the strongest intellectual property protections that have been invited to join.[6] Coupled with the fact that the text of the treaty will be set in stone when opened up to other nations, ACTA has drawn sharp criticism.[7] This paper will focus on the arguments in favor of and against ACTA in the pharmaceutical sector, three proposed modifications or substitutions for ACTA, and will conclude with an opinion of which argument I feel more truly represents the treaty itself.

WHY DO WE NEED ANOTHER IP TREATY?

One study puts the global market share of counterfeited pharmaceuticals at approximately 10%, with only 1% of this being in the developed countries.[8] Another study puts the percentage of counterfeit drugs on the market in developing countries at 50%.[9] Clearly the enforcement mechanisms in place, such as TRIPS[10], are by themselves, not enough to combat this rising problem and other means, such as ACTA, must be given great consideration.    

The provisions being discussed under ACTA would provide for civil penalties for counterfeiting and piracy.[11] Some of the provisions being negotiated are: [12]

·         Seizing and destroying the counterfeited or pirated items, including all materials or implements used in making the counterfeited or pirated items.

·         Judicial or other competent authority to seize any material or documents related to counterfeiting and piracy with or without the party having knowledge.

·         Ways to calculate damages when the right holder has no certain way to do so

·         Scope of the judicial authority to issue injunctions

Also being discussed are border enforcement measures: [13]

·         Apply to imports as well as exports and transportation of goods

·         Rights holders ability to inform customs border agents to seize goods

·         Informing rights holders of incoming infringing shipments

 

 The criminal penalties and guidelines being discussed are:[14]

·         What qualifies for criminal penalties

·         When officials may take action against infringing goods without the rights holders knowledge

·         Search and seizure orders

·         Specific penalties for recording motion pictures and trafficking of counterfeit labels

ACTA will provide for greater enforcement than the TRIPS agreement which lays out the minimum enforcement level standards. Under ACTA, there will be a wider net cast with more authority vested in local governments to destroy infringing goods and punish those that participate in counterfeiting, piracy and trafficking. Even though the aim of ACTA is to lessen the commercial impact of infringing goods, it will, by consequence, protect individual consumers.[15]

Counterfeit drugs are a growing concern for every nation and the citizens of those nations. With the popularity of the internet, it is no surprise that the biggest threat of counterfeited pharmaceuticals comes from the so called online pharmacies. What most individuals do not realize however, is the increasing risk of those same counterfeited drugs making it onto your local pharmacy shelf. Counterfeiters are growing increasingly clever in their quest to introduce their products into the mainstream market. It is often times impossible to tell a legitimate drug from a counterfeit drug until it is too late because they look and taste exactly the same. Counterfeiting pharmaceuticals can produce a high return and it is not just being done by backwoods manufacturers; counterfeiters have grown very savvy, well funded, and have worked diligently to enter mainstream distribution chains. This became increasingly clear when a Chinese official was executed several years ago for approving counterfeited pharmaceuticals.[16]

It is not just the medications themselves being counterfeited; the labeling and packaging of those medications are also being counterfeited. Drug manufacturers routinely send their pharmaceuticals to a wholesaler who can then either send the medication directly to a supplier or send it to a distributor who repackages it and then sends it to the drugstore.[17] When the counterfeited drugs reach this point, it is game over and the counterfeiters have successfully entered the main distribution channel. This poses a greater risk and makes it even more important that these counterfeited drugs are stopped at the border and not given a chance to reach those they could potentially harm. ACTA would give greater control to customs border personnel to inspect goods to ensure they are not counterfeit before they are released on the public.[18] It would also give greater control to local authorities to shut down the manufacturers and storage facilities of counterfeit drugs, although the scope of this ability is not yet clear.[19]

ONE THING ACTA DOES NOT LACK IS CRITICISM

Among the immense amount of criticism ACTA has drawn are few main points:[20]

·         The lack of transparency during negotiations

·         Those concerned with the harm to public interest are being left out of the negotiations, only those with the most power and wealth are being consulted

·         ACTA will create deterrents for generic drug manufacturers

·         The broad meaning given to the term “counterfeit”

The immediate concern regarding ACTA is the lack of transparency and participation of developing nations during the negotiation process. Very little information regarding ACTA has been released to the public even though the negotiating parties agreed, in June of this year, that there was a need for public transparency.[21] The Obama administration has pushed for more transparency in government, but is keeping ACTA under wraps, protecting the text as a state secret.[22] For some, this lack of transparency can only mean it is being kept private because if more was known there would be a major outcry against it.[23]

 To bolster the reasoning of increased scrutiny, if there were more transparency in the negotiations, is the fact that several lobbying executives have been given access to the negotiations.[24] A partial list of these “cleared advisors” include:[25] Time Warner Inc., General Motors Corp., Abbott Laboratories, IBM Corporation, Eli Lilly and Company, Johnson & Johnson, The Dow Chemical Co., Pfizer Inc., eBay Inc., The Proctor & Gamble Co, Verizon Communications Inc, UPS, FedEx Express, Wal-Mart Stores, Inc., Recording Industry Association of America

          Also, the Global Business Leaders Alliance Against Counterfeiting sponsored the first round of negotiations which took place in Geneva. Membership in this Alliance includes: [26] Coca Cola, Daimler Chrysler, Pfizer Inc., The Proctor & Gamble Co., Phillip Morris, Nike, Swiss Watch, Canon, American Tobacco.

The secrecy in negotiations is only the beginning of a much larger problem in negotiating ACTA; the underlying issue is the exclusion of developing nations. If developing nations continue to be excluded from negotiations it will ultimately harm them in two ways.[27] First, developed nations often include IP protection standards in the trade agreements they make with developing nations.[28] This inclusion will result in developing nations being essentially “strong armed” into accepting the strict standards they had no part in negotiating.[29] Complying with these strict standards would force already struggling nations to reallocate funds currently used for purchasing pharmaceuticals or combating the drug trade.[30] Second, it seems that criminal and civil penalties will be a vital part in the enforcement of ACTA.[31] Critics urge:[32]

“It is inappropriate to do so in a venue designed to restrict participation to a small number of developed nations. Exclusive venues will inevitably produce “standards” skewed towards the interests of those nations, and neglect the distinct interests of developing nations in balanced intellectual property enforcement and protection standards.”

Another concern the critics of ACTA share is the overly broad meaning given to the term “counterfeit.”[33] Under TRIPS, “counterfeit” is when a trademark infringement occurs.[34] ACTA would expand that definition to include patent infringements and ultimately swallow up generic drugs.[35] This broadening definition strengthens the position of pharmaceutical companies while doing nothing to address the real problem of fake or sub-standard medications and the impact they have on individuals.[36]

There are also fears that the generic drug market will be adversely affected. If customs agents have greater control to search goods and seize those they believe to be counterfeit, a large supply of legal but generic drugs could be lost or indefinitely delayed. We were given a glimpse of the possible problems in November 2008 when Dutch officials seized and destroyed what they believed to be counterfeit AIDS drugs.[37] When in actuality, the drugs had been purchased by UNITAID for use in Nigeria and were merely passing through Dutch territory en route.[38] These lost drugs would have provided AIDS treatment for 166 individuals for 3 months.[39] This is but one example showing that customs agents are ill equipped to combat the problem of substandard drugs.[40] If this broad interpretation is adopted there can be no question that the types of seizures made by the Dutch will become increasingly common, delaying shipments or even destroying legitimate, life saving drugs.

Aside from the problems unwarranted seizure and destruction causes, is the possible deterrent ACTA may have on generic drug manufacturers themselves. Under the TRIPS agreement, an infringement must have been done purposefully to warrant action but under ACTA, any violation would be actionable.[41] This raises concern for generic manufacturers for several reasons. According to the DOHA declaration, the provisions in the TRIPS agreement are to be interpreted so that they promote access to medicines to all.[42] Under ACTA, the word infringement would be given its broadest possible meaning.[43] This means that generic manufacturers may be too intimidated by the possible penalties to manufacture generics.[44] For example, in Uganda, the legislature is proposing a death sentence for anyone caught counterfeiting drugs.[45]

WELL, DO YOU HAVE A BETTER IDEA?

                There are several modifications and alternatives to ACTA proposed by various governmental agencies and IP watch groups. These ideas range from including developing nations in the negotiations,[46] to completely taking the issue of substandard pharmaceuticals out of ACTA.[47]

The less drastic of all proposed ideas is to simply include developing nations, and a few others, in the negotiations. One such idea is asserted by David Fewer in his paper on the dangers of ACTA.[48] According to Fewer, ACTA negotiations should be available to several groups that have an interest in the treaty including:[49]

“Creator groups (such as musicians and software developers), rights-holder groups (including groups such as documentary filmmakers and academic creators) and user communities (such as consumer groups and security researchers), as well as intermediaries (such as Internet Service Providers (ISPs) and consumer electronics innovators)”

            In July of 2009, Knowledge Ecology International, and Public Knowledge, along with several other interested parties continued the push for more transparency and said that unless seven specific items are made public the negotiations are not transparent.[50] The items these groups say the public must have access to are: 1) Dates and locations of negotiation meetings, 2) Objectives and rules of negotiations, 3) Agenda of meetings, 4) List of participants, 5) Reports of minutes of meetings, 6) Negotiation related documents that have been given to all negotiating parties, and 7) Negotiating texts when given to all members.[51] Currently, none of this information is available to the public.[52] This same statement proposes the United States Trade Representative hold “public consultations” before the formal negotiations are held, modeled after the Federal Trade Commission in that there are “moderated discussion formats with multiple stakeholders.”[53]

            Another solution, that would not replace ACTA, but that would ease customs seizure concerns, is the radio frequency identification system (RFID).[54] Pharmaceutical manufacturers rarely sell to individual suppliers, instead they use one or several of a handful of large distributors.[55] If that alone does not allow room for substandard drugs to enter the market, one must take into account the thousands of smaller distribution companies who may buy in bulk from larger distribution companies.[56] RFID is the exact same technology used in most stores to detect shoplifters and to keep track of inventory.[57] In the pharmaceutical industry it would work much the same way, just on a larger scale. Some of the benefits to RFID include: the ability to track a bad batch of drugs back to their manufacturer; customs agents would no longer need to unpack each case of pharmaceuticals, one scan of the barcode would be sufficient to verify a large amount of drugs; RFID is extremely difficult to replicate, however, if it were to be replicated the database that stores the barcode information would recognize the breach.[58]

            The most severe critics of ACTA believe the problem of substandard medication should never be intertwined with IP concerns.[59] According to one IP watchdog, the agencies and organizations in charge of drug regulation should be determining the quality of pharmaceuticals, not customs agents who are ill equipped to determine if a medicine is infringing IP rights.[60] As reported by IP Watch, critics are concerned that the focus is going to be on protecting the pharmaceutical industry and not the individual patient.[61] The Foreign Affairs and International Trade Office of Canada released a statement regarding ACTA which proposed a, “New dedicated counterfeit and substandard medicines initiative because ACTA is not adequate to address these issues.”[62]

            Another group, Essential Action, worries that a multi-lateral treaty which treats substandard, fake, and counterfeit goods under one broad definition can not properly address the concerns raised by each.[63] Essential Action cites the need for a treaty on counterfeiting to specifically address the concerns the impact these counterfeit drugs have on the public.[64]

FINAL THOUGHTS

            What must be realized when reviewing the criticisms of ACTA, is that it is all conjecture at this point. With that one caveat in mind, ACTA appears to include the problems of substandard medication in the treaty based on financial motives, not public safety concerns. If ACTA were truly concerned with stopping the flow of harmful pharmaceuticals it would not use the one broad term “counterfeiting” to describe all non-legitimate drugs. When the fake, counterfeit, and substandard medicines are included under one large umbrella some important differences are swept aside. First, not all non-legitimate drugs are harmful, some have the same active ingredients as the brand they are created after (generic). This should be an important consideration in determining the ultimate fate of pharmaceuticals seized. Second, it fails to realize the gravity of the situation concerning sub-standard pharmaceuticals and their role in strengthening resistance to disease. Finally, ACTA overlooks the individual in favor of the corporation by allowing for seizures of all suspected counterfeit drugs by customs officials. In an effort to protect the pocketbooks of pharmaceutical companies, ACTA will allow life saving drugs to be stopped at the borders and destroyed.

            There can be no question that a treaty with the potential to impact nations the way ACTA does should not be kept confidential and negotiated with the exclusion of those it could impact the most. ACTA being financially supported by the types of companies it will protect is of grave concern. Companies, such as Nike, Coca Cola, Proctor & Gamble and Phillip Morris, who sponsored the first round of ACTA negotiations, are clearly buying better protection for themselves from the international government at the expense of individuals.

 

---

[1] Office of the United States Trade Representative (Pub. April 2009) The Anti-Counterfeiting Trade Agreement – Summary of Key Elements Under Discussion, at http://www.ustr.gov/sites/default/files/uploads/factsheets/2009/asset_upload_file917_15546.pdf (Sep. 29, 2009)

[2] Id.

[3]

Id.

[4]

Id.

[5] Michael Geist, (Pub. June 2008) Transparency Needed on ACTA at http://www.thestar.com/sciencetech/article/439551 (Oct. 2, 2009)

[6] IP Justice The Anti-Counterfeiting Trade Agreement (ACTA) at http://ipjustice.org/wp/campaigns/acta/ (Sept. 29, 2009)

[7] Id.

[8] Alan Clock, Pharmaceutical Counterfeiting a Global Healthcare Menace: A New Technology Tool at http://www.xstreamsystems.net/images/Pharmaceutical%20Counterfeiting-A%20Global%20Healthcare%20Menace.pdf (Sept. 29, 2009)

[9] Al Bawaba, (Pub. Oct. 2008) International and Saudi Warnings Against Fake and Counterfeit Drugs at http://www.albawaba.com/en/countries/Saudi%20Arabia/236950 (Oct. 6, 2009)

[10] World Health Organization, (Pub. 2009) WTO and the TRIPS Agreement at http://www.who.int/medicines/areas/policy/wto_trips/en/index.html (Oct. 7, 2009)

[11] Id at http://www.ustr.gov/sites/default/files/uploads/factsheets/2009/asset_upload_file917_15546.pdf

[12] Id.

[13] Id.

[14] Id.

[15] Lisa Peets and Mark Young, (Pub. Oct. 2008) A New Opportunity in the Fight Against Fakes. The Anti-Counterfeiting Trade Agreement (ACTA) at http://www.cov.com/files/Publication/7cc4a859-0025-4361-b7ee-621bcd7293e7/Presentation/PublicationAttachment/82f3f6a3-88c4-4915-82db-10990fecc031/A%20New%20Opportunity%20in%20the%20Fight%20Against%20Fakes.pdf (Oct. 6, 2009)

[16] Science Daily, (Pub. July 2007) Combating Counterfeit Pharmaceuticals from China at http://www.sciencedaily.com/releases/2007/07/070716132436.htm# (Sept. 29, 2009)

[17] Francie Grace, (Pub. June 2003) Feds Seize Fake Lipitor at http://www.cbsnews.com/stories/2003/06/04/health/main556851.shtml (Sept. 29, 2009)

[18] Id at http://www.cov.com/files/Publication/7cc4a859-0025-4361-b7ee-621bcd7293e7/Presentation/PublicationAttachment/82f3f6a3-88c4-4915-82db-10990fecc031/A%20New%20Opportunity%20in%20the%20Fight%20Against%20Fakes.pdf

[19] Id.

[20] Robin Gross, (Pub. March 2008) IP Justice White Paper on the Proposed Anti-Counterfeiting and Trade Agreement (ACTA) at http://ipjustice.org/wp/2008/03/25/ipj-white-paper-acta-2008/ (Sept. 30, 2009)

[21] Foreign Affairs and International Trade Canada, (July, 2009) ACTA and Issues Related to Pharmaceuticals and Counterfeit Medicines at http://www.international.gc.ca/trade-agreements-accords-commerciaux/fo/summary-resume.aspx  (Oct. 2, 2009)

[22] James Love, (Pub. March 2009) White House says ACTA text a State Secret. EU parliament says time for more transparency at http://www.keionline.org/blogs/2009/03/12/acta-state-secret (Oct. 2, 2009)

[23] Shamnad Basheer, (Pub. June 2008) Opposing Lack of Transparency in IP: KEI and Michael Geist on the ACTA at http://spicyipindia.blogspot.com/2008/06/opposing-lack-of-transparency-in-ip-kei.html (Oct. 1, 2009)

[24] James Love, (Pub. March 2009) Who are the cleared advisors that have access to secret ACTA documents? at http://keionline.org/blogs/2009/03/13/who-are-cleared-advisors (Oct. 7, 2009)

[25] Id at http://keionline.org/blogs/2009/03/13/who-are-cleared-advisors

[26] Susan Sell, (Pub. Sep. 2009) Cat and Mouse: Forum-Shifting In The Battle Over Intellectual Property Enforcement at http://www.ipgovernance.eu/conferences/2009APSAToronto/Sell_APSA2009_Cat_and_Mouse.pdf (October 3, 2009)

[27] David Fewer, Canadian Internet Policy and Public Interest Clinic, (Pub. Apr. 2008) Comments to Anti-Counterfeiting Trade Agreement at http://www.cippic.ca/uploads/CIPPIC_LT_DFAIT-ACTA-30%20April%2008.pdf (Oct. 6, 2009)

[28] Id.

[29]

Id.

[30]

Id.

[31]

Id.

[32] Id at http://www.cippic.ca/uploads/CIPPIC_LT_DFAIT-ACTA-30%20April%2008.pdf

[33] William New, Intellectual Property Watch, (Pub. Feb. 2009) Concern Erupts Over WTO System And Medicines Shipments; TRIPS Talks Rekingling at http://www.ip-watch.org/weblog (Oct. 7, 2009)

[34] Justice Louis Harms, WIPO Advisory Committee on Enforcement, (Pub. Sep. 2007) at http://www.wto.org/english/.../en/wipo_ace_4_3.pdf (Oct. 4, 2009)

[35] Id at http://www.international.gc.ca/trade-agreements-accords-commerciaux/fo/summary-resume.aspx

[36] Id at http://www.bu.edu/law/faculty/scholarship/workingpapers/documents/OuttersonK051909.pdf

[37] Kevin Outterson, (Pub. May 2009) Important Safety Rules Should Not Hinder Legitimate Drug Markets at http://www.bu.edu/law/faculty/scholarship/workingpapers/documents/OuttersonK051909.pdf (Sept. 30, 2009)

[38] Id.

[39]

Id.

[40] Catherine Saez, (Pub. Oct. 2009) Access to Safe Medicine a Public Health Issue, Not IP, Says Panel at http://www.ip-watch.org/weblog/2009/10/04/access-to-safe-medicine-a-public-health-issue-not-ip-says-panel/ (Oct. 5, 2009)

[41] Id.

[42]

Id.

[43]

Id.

[44]

Id.

[45] Id.

[46] David Fewer, (Pub. May 2008) ACTA: The Hollywood Dream: CIPPIC at http://www.p2pnet.net/story/16050 (Oct. 2, 2009)

[47] Id at http://www.ip-watch.org/weblog/2009/10/04/access-to-safe-medicine-a-public-health-issue-not-ip-says-panel/

[48] Id at http://www.p2pnet.net/story/16050

[49] Id at http://www.p2pnet.net/story/16050

[50] Electronic Frontier Foundation, Knowledge Ecology International and others, in a statement of 21 specific recommendations they sent to the United States Trade Representative, (Pub. July 2002) at http://www.keionline.org/misc-docs/4/ustr_transparency_asks_22jul2009_final.pdf (Oct. 7, 2009)

[51] Id.

[52]

Id.

[53]

Id.

[54] John James, (Pub. Feb. 2006) FDA, Companies Test RFID Tracking To Prevent Drug Counterfeiting at http://www.thebody.com/content/art31582.html# (Sep. 30, 2009)

[55] Id.

[56]

Id.

[57]

Id.

[58]

Id.

[59] Id at http://www.ip-watch.org/weblog/2009/10/04/access-to-safe-medicine-a-public-health-issue-not-ip-says-panel/

[60] Id at http://www.ip-watch.org/weblog/2009/10/04/access-to-safe-medicine-a-public-health-issue-not-ip-says-panel/

[61] Id.

[62] Id at http://www.international.gc.ca/trade-agreements-accords-commerciaux/fo/summary-resume.aspx

[63] Essential Action, (Pub. March 2008) Re: Comments of Essential Action on the Proposal for an Anti-Counterfeiting Trade Agreement at http://www.essentialaction.org/access/index.php?/archives/131-Comments-on-Proposed-Anti-Counterfeiting-Treaty.html (Oct. 1, 2009)

[64] Id.

Christie Jorge

“PRESCRIPTION FOR BETTER ACCESS NECESSARY MEDICATIONS IN SUB-SAHARAN AFRICA”

 

A.  INTRODUCTION

According to the World Health Organization, every year, infectious diseases kill 14 million people around the world, and 90% of these victims live in developing countries.[1]  One of the deadliest infectious diseases is Acquired Immune Deficiency Syndrome (“AIDS”).[2]  In 2007, it was estimated that more than 33.2 million people across the globe were living with AIDS.[3]  AIDS has become the worst pandemic of our time.  “Sub-Saharan Africa remains the region most heavily affected by HIV worldwide, accounting for two-thirds (67%) of all people living with HIV and three-quarters (75%) of AIDS deaths in 2007.” [4]  One of the victims taken by the AIDS epidemic in Sub-Saharan Africa was the mother of a little boy named Yonas.  Every single day, like many other people in his country, Yonas must fight to not become a statistic.

Yonas arrived at the antiretroviral therapy clinic supported by the Clinton Foundation in his native Ethiopia, he was notably small for his age and suffered from severe intestinal problems.  Like his mother, who had died four months earlier, Yonas was HIV positive.  Shortly after being brought to the clinic, Yonas began antiretroviral treatment.  After a few weeks, he returned to the clinic radically transformed.  He had gained weight and was playful and smiling.  The nurses at the clinic described Yonas as ‘having returned from his death bed.’[5]     

 

As people, like Yonas, who live in Sub-Saharan Africa fight to return from their death beds—one size does not fit all in the world of intellectual property, and changes need to be made to meet the future medical needs of these patients that require newer and more effective treatment.

Intellectual property law is often defined as a regulatory tool that is intended to protect rights and secure commercial ends. [6]  Intellectual property law, without a doubt, plays an important role in giving major pharmaceutical companies an incentive to research and develop medications.  However, there are times when law becomes a key player in a game with far bigger stakes than financial growth and economic incentives—rather it becomes key player in a game of life and death, where the well-being of innocent people stands in the balance.  This high stakes game has led many activists and organizations to challenge our current system and demand change.  Despite recent improvements in supplying medication to the people in Sub-Saharan Africa—far more improvement is needed in order to truly help HIV/AIDS victims get the medication they need or will need as their medical needs inevitably change.

B.  RECENT IMPROVEMENTS IN SUPPLYING ANTIRETROVIRAL THERAPY IN SUB-SAHARAN AFRICA

 

According to an annual AIDS report, “Towards Universal Access,” jointly published by the World Health Organization (“WHO”), the United Nation Children’s Fund (“UNICEF”), and the United Nations AIDS program (“UNAIDS”): “More than 4 million…adults and children were receiving antiretroviral therapy in low-and middle-income countries at the end of 2008; over one million more people than at the end of 2007.  This represent[ed] a 36% increase in one year, and a 10-fold increase in five years.  The greatest increase in the number of people receiving treatment in 2008 was in Sub-Saharan Africa, the region with the greatest need.” [7] Overall, about 44% of people with HIV in Sub-Saharan Africa who were in need of medication, now have access.[8]  However, “[d]espite progress antiretroviral therapy coverage in low-and middle-income countries stood at 42%...of the 9.5 million…people in need at the end of 2008, up from 33% at the end of 2007.” [9]   Thus, even with this recent mprovement there are still 5 million others in dire need of receiving antiretrovirals worldwide.[10]   The availability of cheaper antiretroviral medications played a pivotal role in the increased treatment of AIDS by countries with poor resources, such as Sub-Saharan Africa. [11]   However, this is only the part of the fight against HIV/AIDS in Sub-Saharan Africa.  Many developing countries still face problems in accessing cheap, appropriate antiretroviral when a patient’s treatment need change, requiring new medications to properly treat HIV/AIDS.

C.  UNDERSTANDING HOW HIV/AIDS TREATMENT WORKS

Antiretroviral drugs (“ARVs”) are the main type of treatment for HIV/AIDS. [12]  It prevents individuals from becoming sick for a number of years. [13]  The treatment is made up of a cocktail of drugs that must be taken every day, for the rest of a person’s life. [14]  The aim of ARVs is to keep the amount of HIV in the body at a low level. [15]  Thus, preventing any weakening of the immune system.[16]  It is strongly recommended that a patient take a combination of three or more ARVs.[17]  Due to the fact, that if only one drug was taken, the HIV will quickly become resistant to it and as a result the drug will cease to work.[18]  However, taking a combination of two or more ARVs, simultaneously, greatly reduces the rate at which resistance occurs.  However, drug resistance is something that will inevitably develop. [19]  In fact, 10 to 15% of individuals taking ARVs will develop resistance to the combination of drugs prescribed within four to five years. [20]  When drug resistance eventually develops, it is of the utmost importance that patients have access to newer, more potent, and less-toxic ARVs. [21]

Currently, there are more than 20 approved ARVs. [22]  However, all of these ARVs are not licensed or available in every country. [23]   When a patient begins receiving treatment, the combination of drugs that a person takes is called first line therapy. [24]  However, if after a period of time the HIV becomes resistant to the combination, or the patient experiences side effects, then a change to a second line therapy is strongly recommended. [25] Second line therapy includes a minimum of three new drugs, with at least one from a new class, in order to increase the chances that the treatment will be effective and successful. [26] 

D.  SUPPLYING  SECOND LINE THERAPY MEDICATION FOR DEVELOPING COUNTRIES

 

 Currently, according to the 2009 World Health Progress Report, “[t]he vast majority of adults on treatment in low- and middle-income countries are receiving first line antiretroviral drug regimens, and only 2% are receiving second line regimens.” [27] However, this number is rising, because every year about 3% of ARV patients switch from first line treatment to second line treatment.[28] Medecins Sans Frontieres (“Doctors Without Borders”), an international medical humanitarian organization, has its longest running AIDS project in Khayelitsha, South Africa.  About 22% of the patients in Khayelitsha that have been on treatment for five years need to be switched to a second-line drug combination, and more affordable newer medicines to be available in developing countries in order to make this possible for these patients.[29]

In the future, more and more countries such as Khayelitsha will need access to suitably affordable, second line antiretroviral therapy when a patient’s treatment needs require change.  As treatment becomes more widespread, and resistance increases, the high price of second-line drugs is going to become a significant issue. [30]   A major obstacle in providing affordable second- line therapy treatments is the Agreement on Trade Related Intellectual Property Rights (“TRIPS”).

E.  INTENDED GOALS OF THE TRIPS AGREEMENT

TRIPS is part of the World Trade Organization (“WTO”). [31] The TRIPS Agreement provides protection for intellectual property rights around the world, by introducing laws that were once more commonly seen in developed countries into the international trading system.[32]  The agreement establishes minimum international standards regarding intellectual property rights. [33]  Further, it also requires that countries, which are member of the WTO, enact laws enforcing intellectual property rights. [34]  However, this agreement has created multiple problems for developing countries, in regards to access to patented medicines. 

Prior to the development of TRIPS, these developing countries were not required to protect pharmaceuticals.[35]  Today, developing countries that are members of the WTO are now required by TRIPS to issue 20 years of patent protection for medicines, and they are prohibited from producing generic version of these drugs during this period.[36]  The requirements imposed on developing countries by TRIPS have created a number of barriers in providing affordable treatment to AIDS patients.  At the moment patents continue to exist for the majority of second-line therapy drugs. [37]  In contrast to a number of first-line AIDS drugs patents which have expired, allowing generic drug manufacturers to produce first-line medications at a more affordable rate. [38]  However, second-line therapy, which patients will eventually need continue to remain expensive, [39]  and the TRIPS agreement is contributing to the problem.

F.  TRIPS CREATES A SIGNIFICANT BARRIER IN CREATING ACCESS TO AFFORDABLE SECOND LINE THERAPY

 

The TRIPS agreement brought an end to the generic competition that decreased the price of first generation antiretrovirals.[40] As a result of the TRIPS agreement, drugs that are new and better, are only available to individuals who live in countries that have the means to pay the high cost. [41]  “Poor countries are forced to wait until their patent expires or the proprietary prices are forced down.”[42]  Ultimately, poor countries are left in the hands of major pharmaceutical companies. Financially poor developing countries, find themselves in their current situation because they are unable to help themselves utilizing the current system provided by TRIPS.  However, at times organizations such as the Clinton Foundation, Doctors Without Borders, and UNITAID, along with AIDS activists, and a number of national governments have worked together in order to achieve a number of price reductions for developing countries through direct negotiations with the pharmaceutical companies. [43]

In August 2009, the Clinton HIV/AIDS Initiative announced agreements with two drug companies to bring the cost of second line ARVs to under US $500 per person annually.[44] “At the moment, second line ARVs in Kenya cost US $1,000 per person per year, while first line ARVs cost under US $100,” according to the coordinator of the Kenya Treatment Access Movement. [45]  In contrast, the median price for first line treatments “…of the four combinations most widely used in first-line treatment was US $143 per person per year in low-income countries, US $162 per person per year in lower-middle income countries and US $161 per year in upper middle-income countries.  The prices of most first-line regimens decreased between 30-68% from 2004 to 2008 in low - and middle-income countries.  [While,] second line treatments continue to be more expensive.” [46]  Continuing to address problems associated with second-line ARVs is of the utmost importance.  It will ensure the most cost-effective use of available resources and the sustainability of treatment programs. [47]  Every effort possible needs to be made by all those involved, at every level, to close the gap in costs.  Currently, TRIPS fails to adequately provide poor developing countries with an opportunity to pursue new and better drugs, despite WTO’s efforts to address problems developing countries have encountered with the agreement. 

In recognition of the problems faced by developing countries, in light of TRIPS, the WTO proposed extended transition periods for implementation of TRIPS provisions and provided means by which generic version of medications under patents might be produced by a developing country through voluntary licensing and compulsory licensing. [48]

G.  MECHANISIMS CREATED BY WTO FAIL TO ADEQUATELY ALLEVIATE BURDEN OF TRIPS ON POOR DEVELOPING COUNTRIES

 

1.  VOLUNTARY LICENSING

 

Voluntary licensing allows the government, an individual, or an organization to request a voluntary license from a patent holder, such as a pharmaceutical company. [49]  Obtaining such a license allows a poor developing country to produce generic drugs, in the event of a public health emergency, either through imports or local production of the medication. [50]  However, there is a significant disadvantage with voluntary licenses.  Due to the fact, that the ability of a poor developing country to provide medication, for patients in need, depends upon the goodwill of the patent holder. [51]  They exercise no control over their future.

2.  COMPULSORY LICENSING

A compulsory license is a government issued license that enables an individual to produce a patented product, such as a medication, without the consent of the patent holder.[52] Governments can issue them if a patent owner abuses their rights by, for example, offering the medication at a price that is too high for potential buyers.[53]  Typically, the pharmaceutical company is provided with royalties. [54]  However, this is not always required. [55]  Following the 2001 Doha agreement a country can issue a compulsory license for a drug that treats a disease causing a severe health emergency in that country, without royalties being paid. [56]  As a practical issue, compulsory licensing is difficult for developing countries to take advantage of for the following reasons:

(1) Generic manufacturers are limited to producing only the quantities predefined in each compulsory license. This curbs the large-scale production that is required to deliver drugs cheaply.  (2) Certain large pharmaceutical companies have demonstrated that countries that issue compulsory licenses may face repercussions. (3) It was ruled that licenses should be granted ‘predominantly’ to supply the ‘domestic market’, making it difficult for poor countries lacking technological capabilities to access generic drugs manufactured abroad.” [57]

 

Ultimately, the WTO issued the paragraph 6 waiver, which allowed members who are unable to produce pharmaceuticals at home and are suffering a serious health crisis to import generic medication from other nations under compulsory license.  However, as a result of the complicated nature of compulsory licensing, it has been used in a small number of circumstances, by countries such as Thailand.[58]

In 2006 and 2007 Thailand issued a number of compulsory licenses for antiretroviral drugs. [59]  As a result, Abbott, a leading pharmaceutical company, accused Thailand of ignoring the patent system that was in place. [60]  Abbot responded by refusing to apply for licenses to sell seven of their newest products in Thailand. [61]  Additionally, Thailand was also placed on a US Trade Representative priority watch list, also known as the 301 Report.  Countries placed on this report are recognized as countries that take part in infringing on the intellectual property rights of other countries.[62] Thus, illustrating why countries are hesitant to utilize the compulsory licensing scheme set forth by the WTO.[63] 

H.  SOLUTIONS SUGGESTED BY OPPONENTS

Some opponents have suggested that the only way to resolve the current issues is to abolish the TRIPS system for medicines altogether, and replace it with an alternative form, such as a reward system for innovative research and development. However, it seems extremely unlikely that TRIPS will be completely abolished.  Nevertheless, an alternative solution needs to be explored.  Recently, UNITAID has been leading the way by attempting to create a patent pool of HIV drug patents.

1.  PATENT POOLS

The pool would hold licenses on various patented HIV medications, which generic companies could then produce at a lower cost for poor countries. [64]  The hope that it will make the production of generic versions of antiretrovirals easier to negotiate, which would result in faster and more efficient treatment of HIV/AIDS patients. [65]  However, this will only become a reality for developing countries, such as Sub-Saharan Africa, if the major pharmaceutical companies participate in this voluntary program. [66]  These patent owners would receive royalties, in exchange for including their patent in the pool. [67]    

Recently, the international medical humanitarian organization Doctors Without Borders called on nine of the world's largest pharmaceutical companies to participate in the patent pool.  These companies include the following: Abbott Laboratories, Boehringer Ingelheim, Bristol-Myers Squibb, Johnson & Johnson, Gilead Sciences, GlaxoSmithKline, Merck & Co, Pfizer, and Sequoia Pharmaceuticals. [68]  These pharmaceutical companies have the potential to help accelerate the availability of new treatments for millions of people living with HIV/AIDS in developing countries, such as Sub-Saharan Africa, by pooling their patents on a list of key HIV medications. [69] Some of the drugs identified by Doctors Without Borders to be essential for the pool they are creating, are also recommended by the World Health Organization for use in developing countries. [70]

When and if a pharmaceutical company chooses to include their patent in the pool, they will be made available to others for production and further development. According to the director of policy and advocacy for Doctors Without Borders, "It’s a simple idea: companies share their knowledge in return for fair royalty payments.” [71] However, "…it has the potential to transform companies’ approaches to access to HIV medicines and foster innovation in a way that marks an alternative to the confrontation and litigation of the past.” [72] 

Patent pools have the potential to have a considerable impact on people living with HIV/AIDS. [73]  A patent pool would speed up the availability of more affordable versions of new medicines.  The success of the patent pool system would mean that generic production of medications could begin prior to the 20-year patent terms expiring. [74]  According to the medical coordinator for Doctors Without Borders in South Africa, “This opportunity comes at a crucial time.  Many patients in our programs have developed resistance to their medicines and need to switch to newer, more effective drugs now.  Because these are either unavailable or unaffordable, patients face a return to AIDS death row as treatment options dry up.” [75] 

I.  CONCLUSION

Living in the twenty-first century, we have medications available to help others that not too long ago people only dreamed would one day become possible.  Monumental steps have been taken, and continue to be taken, in order to help people fight life-threatening diseases like HIV/AIDS.  Western pharmaceutical companies have made significant advances in the biotechnological field that developed the AIDS cocktails, which developing countries need. [76]   As a result of these powerful AIDS cocktails, the number of deaths caused by AIDS has declined.[77]  However, AIDS continues to be a leading cause of death. 

  It is widely agreed that that there are significant benefits involved in protecting intellectual property.  However, such protections are outweighed and must defer to developing countries, when children like Jonas, in Sub-Saharan Africa are faced with a deadly HIV/AIDS epidemic.  The intent of the TRIPS Agreement was to allow protection of intellectual property rights, in addition to allowing developing countries flexibility in adapting to those rights, especially in times of national emergency. [78]  However, TRIPS has failed to meet its intended purpose in helping developing countries.  We need to take action before it is too late and people lose their life in this high stakes game of life and death.  Developed countries and pharmaceutical companies need to surrender their upper hand, and give people like Jonas a real chance to play all of their best cards, particularly through universal access to affordable first and second-line therapy in the immediate future, truly giving Jonas and other a chance to fight the HIV/Aids epidemic with all of their heart and WIN! 

---

[1] Amir H. Khoury, The “Public Health” of the Conventional Patent Regime & the Ethics of “Ethicals:” Access to Patented Medicines, 26 CSZAELJ 25, 26 (2008).

[2]Annex Table 2 Deaths by cause, sex and mortality stratum in WHO regions, The World Health Report, 2004, http://www.who.int/whr/2004/annex/topic/en/annex_2_en.pdf

[3] AIDS Epidemic Update, UNAIDS, Nov. 19, 2007, http://data.unaids.org/pub/EPISlides/2007/2007_epiupdate_en.pdf

[4] UNAIDS 2008 Report on the global AIDS epidemic, UNAIDS, July 29, 2008, http://www.unaids.org/en/KnowledgeCentre/HIVData/GlobalReport/2008/

[5]William J. Clinton Foundation Aids Initiative: Pediatric Program, 2009, http://www.clintonfoundation.org/explore-our-work/#/clinton-hiv-aids-initiative/

[6] Amir H. Khoury, The “Public Health” of the Conventional Patent Regime & the Ethics of “Ethicals:” Access to Patented Medicines, 26 CSZAELJ 25, 25 (2008).

[7] 2009 Progress Report: Towards Universal Access, World Health Organization, Sept. 30, 2009, http://www.who.int/hiv/pub/2009progressreport/en/index.html

[8] UN: 4 million on AIDS drugs, others still in need, Associated Press, Sept. 30, 2009, http://www.google.com/hostednews/ap/article/ALeqM5gl6MVsp5U9RvzzCpXb70lgpWxzNAD9B1L4I00

[9] 2009 Progress Report: Towards Universal Access, World Health Organization, Sept. 30, 2009, http://www.who.int/hiv/pub/2009progressreport/en/index.html

[10] UN: 4 million on AIDS drugs, others still in need, Associated Press, Sept. 30, 2009, http://www.google.com/hostednews/ap/article/ALeqM5gl6MVsp5U9RvzzCpXb70lgpWxzNAD9B1L4I00

[11] AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[12]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[13]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[14]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[15]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[16]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[17]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[18]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[19]Affordability, Availability and Adaptability of AIDS Drugs in Developing Countries: An On-  going Challenge, Doctors Without Borders, Aug. 1, 2008, http://doctorswithoutborders.org/news/article.cfm?id=2877

[20] AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[21]Affordability, Availability and Adaptability of AIDS Drugs in Developing Countries: An On-  going Challenge, Doctors Without Borders, Aug. 1, 2008, http://doctorswithoutborders.org/news/article.cfm?id=2877

[22]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[23]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[24]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[25]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[26]  Introduction to HIV and AIDS Treatment, Avert.org, July 17, 2009, http://www.avert.org/treatment.htm

[27] 2009 Progress Report: Towards Universal Access, World Health Organization, Sept. 30, 2009, http://www.who.int/hiv/pub/2009progressreport/en/index.html

[28] Global: Clinton Foundation closes deal to slash cost of second-line ARVs, Plus News, Aug. 7, 2009, http://www.plusnews.org/Report.aspx?ReportId=85623

[29] Affordability, Availability and Adaptability of AIDS Drugs in Developing Countries: An On-going Challenge, Doctors Without Borders, Aug. 1, 2008, http://www.doctorswithoutborders.org/news/article.cfm?id=2877

[30]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[31] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[32] Amir H. Khoury, The “Public Health” of the Conventional Patent Regime & the Ethics of “Ethicals:” Access to Patented Medicines, 26 CSZAELJ 25, 26 (2008).

[33] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPped’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[34] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[35] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[36]  A Sick State: Access to Medicine in South Africa, iCommons.org, Feb. 9, 2008, http://icommons.org/articles/a-sick-state-access-to-medicine-in-south-africa

[37]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[38]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[39]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[40]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[41]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[42]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[43]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[44] Global: Clinton Foundation closes deal to slash cost of second-line ARVs, Plus News, Aug. 7, 2009, http://www.plusnews.org/Report.aspx?ReportId=85623

[45] Global: Clinton Foundation closes deal to slash cost of second-line ARVs, Plus News, Aug. 7, 2009, http://www.plusnews.org/Report.aspx?ReportId=85623

[46] 2009 Progress Report: Towards Universal Access, World Health Organization, Sept. 30, 2009, http://www.who.int/hiv/pub/2009progressreport/en/index.html

[47] AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[48] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[49]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[50]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[51]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[52] Compulsory licensing of pharmaceuticals and TRIPS, World Trade Organization, Sept. 2006, http://www.wto.org/english/tratop_e/TRIPs_e/public_health_faq_e.htm

[53]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[54]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[55]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[56]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[57]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[58]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[59]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[60]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[61]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[62]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[63]  AIDS, drug prices and generic drugs, Avert.org, Sept. 10, 2009, http://www.avert.org/generic.htm

[64] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[65] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[66] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[67] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[68] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[69] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[70] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[71] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[72] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[73] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[74] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[75] Drug Companies Called on to Pool HIV Patents, Doctorswithoutborders.org, Sept. 30, 2009, http://www.avert.org/generic.htm

[76] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[77] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

[78] Michelle M. Nerozzi, The Battle Over Life-Saving Pharmaceuticals: Are developing countries being ‘TRIPpd’ by developed countries?, 47 VLLR 605, 640 (2002).

 

The Transshipped Pills that Kills

Jonathan Cole

There is a growing problem in the health care industry that is widely unreported.  Illegal and counterfeit drugs are appearing in both developed and developing nations with alarming regularity. These drugs are a threat to the integrity of the health care system, the confidence of patients and the quality of treatment required to combat serious medical problems.  Unfortunately, this issue has been considered by many countries to be someone else’s problem.  A large part of the counterfeited drugs enter the medical system through transshipments.  These transshipments often take place in “economic free” zones, known as foreign trade zones.  These zones are relatively free from customs inspections and simply operate to improve the ease of transactions.  Since the majority of the products entering the foreign trade zones never flow into the host country’s domestic market, the country hosting the zone has little incentive to inspect the goods. These goods then get passed along to other countries with the counterfeit pharmaceuticals now included.  The counterfeit drugs are then passed off as authentics, whether or not they provide the same benefit for the customer or patient.  This paper will discuss the hazards of counterfeit pharmaceuticals entering the streams of medical commerce and the risks associated with it.

 

What is a Transshipment?

            A transshipment is a shipment of goods, or a container, to an intermediate destination, before reaching its final destination.[1] Transshipments are usually legitimate actions and part of everyday trade in goods. [2] Companies use transshipments for a number of logistical reasons.  Companies may need to break down a ship with goods in it, separate those goods and send a portion of that good to many different destinations. For example, Ship A may be carrying acetaminophen, better known as Tylenol, to a transshipment yard.  Ship A will then offload its cargo of pills. Those pills will be labeled in the respective languages and destinations and get loaded on Ships 1, 2 and 3. Each of these ships will take the newly labeled pills to their respective countries for sale.  In this manner, each country gets the pills they need, in properly labeled bottles, with the correct dosage and language requirements.  Transshipments, in a fully legal form, allow companies and distributors to most efficiently distribute their product.  This method allows Ship A to bring the product to the transshipment yard, which is acting as a giant distribution center. Transshipment also allows ships 1, 2 and 3 to take back to their respective countries the proper goods from “Tylenol” and the many other suppliers that bring goods to the transshipment yard.  The problem with this type of operation is that the transshipment yards are often located in a Foreign Trade Zone (zone).[3]  These zones are relatively free from regulation and inspection by customs and the granting authority.

 

How do Transshipments Promote Counterfeits?

            When products are transshipped, they are typically sent to designated Foreign Trade Zones to be offloaded.  These zones are specifically set up so that goods can pass without being subject to customs duties.[4]  The goods are often unloaded and broken down into their most basic units so that they may be placed into their final sales packaging and organized into manageable distributable quantities.  When the product is broken down into smaller sections, those who produce counterfeit pharmaceuticals introduce those products into the health care stream.  Introduction of counterfeit goods is relatively easy because customs officials generally do not inspect the goods with the same veracity that goods would receive if they were being imported into that host country’s domestic market.

            In 1934, the United States enacted the Foreign Trade Zones Act.[5]  The purpose of this act is to expedite and encourage foreign commerce. In order to achieve this purpose, host countries must exempt goods that are brought into a foreign trade zone from rigorous customs inspections. Additionally, the goods are encouraged to be “broken up”, which allows counterfeited goods to be easily slipped in with “legitimate” goods or become purposefully mislabeled as a different product.  The Foreign Trade Zone Act of 1934, 19 U.S.C. § 81c, says the following:

Foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into a zone and may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported, destroyed, or sent into customs territory of the United States therefrom, in the original package or otherwise; but when foreign merchandise is so sent from a zone into customs territory of the United States it shall be subject to the laws and regulations of the United States affecting imported merchandise.[6]

                                                                                                (emphasis added)

 

This section states that companies may purchase goods that are in the zone, break them up, and even repackage the goods before shipping and selling them into a stream of commerce.  All of these steps in the process are weak points for counterfeiters to introduce their products into a legitimate health care system.  Additionally, the guidelines for customs supervisors are outlined in 19 C.F.R. § 146.3(b) as follows:

(b) Supervision. … The port director may direct a Customs officer to supervise any transaction or procedure at a zone. Supervision may be performed through a periodic audit of the operator's records, quantity count of goods in a zone inventory, spot check of selected transactions or procedures, or review of recordkeeping, security, or conditions of storage in a zone.[7]

 

These guidelines have no instruction to ensure that the goods that come into the port are authentic, i.e. not counterfeit.  Very few people would argue that it is the job of customs to ensure that all products are of an adequate quality to be resold in a particular market; nor would most claim that it is the job of customs to be the primary enforcer of patent, trademark, or copyright protection.  This paper posits that it should be the job of customs to ensure that parties acting in the Foreign Trade Zones obey the laws of the land where the zone is located.  At the very least, customs officials should ensure that parties are prohibited from purposefully mislabeling or fraudulently misrepresenting their products. 

 

What Type of Counterfeits at Issue?

            The World Health Organization (WHO) has created a task force to combat counterfeiting of medical products.  This task force is called the International Medical Products Anti-Counterfeiting Taskforce (IMPACT).[8]  IMPACT has created a proposal for combating counterfeits by utilizing standard definitions.  This document contains a proposal attempting to define a counterfeit pharmaceutical. That definition is as follows:

A medical product is counterfeit when there is a false representation in relation to its identity (name, composition, strength, or any other element that may influence the judgment of health professionals, patients or consumers about the identity of the product) or source (manufacturer, country of manufacturing, country of origin, marketing authorization holder, or any other element that may influence the judgment of health professionals, patients or consumers about the source of the product). This applies to the product, its container or other packaging or labeling information. Counterfeiting can apply to both branded and generic products and counterfeit products may include products with the correct components or with the wrong components, without active ingredients, with incorrect amounts of active ingredients or with fake packaging.[9]

 

This is a very broad definition and covers the two main aspects of counterfeiting, trademark/patent protection and “quality control”[10].  The first type of counterfeiting, trademark/patent protection, thwarts customs and regulatory systems designed to protect patents and monitor drug safety, efficacy, and quality.  The second type of counterfeiting, quality control, is the most concerning aspect of counterfeiting.  Poor quality counterfeited products can impede patient recovery, undermine disease control and prevention, increase drug resistance, and, if toxic, sicken or kill patients.[11]  Since no uniform definition about what a counterfeit drug actually exists, authorities are struggling to enforce the law.

Most people mistakenly believe that the pharmaceutical industry has an interest solely in protecting intellectual property rights part of the definition.  Additionally, people mistakenly believe access to healthcare groups solely have an interest in the quality control definition against counterfeiting.  In reality, both sides should argue for both aspects of the definition because each has an interest in comprehensive protection.  Without protection for both IP and quality control the public will suffer in terms of both economic factors and quality of life.

Many human rights and access to healthcare pundits are not in favor of cracking down on counterfeiters because they believe that enforcement will raise the price and decrease the availability of pharmaceuticals in developing nations.  The counter argument is that without enforcement, serious health concerns arise.  Sub-par pharmaceuticals can do more damage than good, despite the great price.  No matter how cheap the product is, if it does not work, it is not worth the price. Unfortunately, the usefulness of the counterfeited drug, or lack thereof, is not discovered until long after the product is consumed.

 

How do Counterfeits Hurt the Public?

            Pharmaceutical counterfeiting appears to be a perfect crime.  Since counterfeit and authentic drugs are virtually indistinguishable by consumers, the crime is difficult to detect.[12]  If a patient’s condition improves, nobody even knows that a counterfeiter profited from his illegal actions.[13]  On the other hand, if the patient’s health deteriorates the decline often is attributed to reasons other than counterfeit medicine.[14]  Typically, when a medicine does not respond as expected in an individual, that reaction is attributed to either an adverse reaction with that medicine or an ineffective method of treatment.  The usual course of action is to try another method of treating the patient. Rarely does the patient or the doctor first attribute the adverse reaction or result to a possibility that the medicine which was prescribed was not the medicine that the patient was taking.

            If doctors knew the anticipated extent of consequences that result from counterfeit drugs, their behavior in prescribing pharmaceuticals might be different.  Imagine living in a world where doctors were afraid to write prescriptions because it was unclear whether the pharmacy had “real” pharmaceuticals. [15]  Deterioration in a patient’s condition or adverse affects from a sub-par drug is a logical conclusion when a counterfeit drug is taken.  The effects upon patients are clear, counterfeit drugs that are not exact replicas of the licensed drugs will affect the quality of the medical care that patients receive. 

The effect of counterfeit medicines on pharmaceutical companies is not quite as obvious.  If a counterfeit drug is violating an intellectual property protection, the drug company will need to discover, investigate, and litigate to get the drug off the market.  Additionally, any recovery that the drug company may receive will be offset by a counterfeiter’s judgment proof bank balance.  In the alternative, if the counterfeit drug makes it all the way to the patient and indeed does cause harm, the drug company will have an additional set of problems.

            If the patient is harmed by the counterfeit drugs, they will most likely go after the brand name drug manufacturer.  The burden will be on the drug manufacturer to prove that it was not their product, but a counterfeit, that caused the harm to the patient.  Additionally, lawsuits against major drug manufacturers open a floodgate of litigation from other patients who are not having success with their treatments, whether or not the problems with treatment are from their medication.  Moreover, the drug manufacturer will lose their goodwill and reputation as a result of the pending lawsuits.[16]  These costs are all placed upon the public in one of three ways; the price to consumers will increase, the wages of employees will decrease, or the return on investment will decrease.  The resulting loss in gross income that the “real pharmaceutical companies” experience as a result of counterfeiters will stifle the funds they can allocate to research and development.[17] This will result in a lower number of “cures” for diseases, which will harm all sectors of the public, both developed and developing nations.

 

Public Health’s Lethal Injection

            Some say that counterfeiters provide the only low cost option to developing nations. This viewpoint ignores the costs associated with substandard pharmaceuticals.  Often, counterfeits contain inactive ingredients, incorrect ingredients, improper dosages, or sub-potent or super potent ingredients.[18] As a result, patients may experience adverse health consequences and will never know the cause of their undesirable reaction.  If you purchase a counterfeit handbag or watch, you are stealing from the authentic producer. If you buy a counterfeit drug, it may cost you your life. Although counterfeit drugs might be cheaper in direct purchase cost, you get what you pay for in the long run.  For example, the drug PROCRIT, an injectable, sterile drug used by cancer and AIDS patients, was counterfeited by replacing the active ingredient with non-sterile tap water, which could have caused a severe infection in the bloodstream of these vulnerable patients. [19] Other counterfeiters have replaced schizophrenia and bipolar drugs with aspirin.[20] In addition to psychological patients not receiving the proper drugs to treat their illnesses, some of the patients may have been allergic to aspirin which would have been particularly dangerous.[21]  Costs such as a decrease in confidence in the medical community, increased costs from inadequately treated diseases, and increased costs from side effects of sub-par treatment from the counterfeit medicines are not factored into the cheaper price of counterfeits.

 

Problems with Enforcement

            Enforcing laws that prohibit counterfeit pharmaceuticals is not an easy task.  To begin with, legislators need to sway public opinion towards enforcing safe drug laws.  Since the largest group of consumers for pharmaceuticals is seniors, who also happen to be regular voters, cheaper medical costs is an easy way to get votes.[22]  Even well intentioned legislators wishing to lower pharmaceutical costs are swept into looking towards purchasing price controlled pills. Unfortunately, price controls do not guarantee safe pharmaceuticals.  According to Health Canada, the countries national health agency, Canada cannot be responsible for monitoring the quality of drugs that is exported to America; especially not the drugs that are not even manufactured in Canada.[23] The lack of quality control is not a political issue regularly viewed by voters and so it is not factored into their decisions when picking a candidate.  Without backing from the voters, price becomes the main, and perhaps only, issue that is discussed by politicians.  This provides a perverse incentive to legislators to ignore quality for cheap and substandard pharmaceuticals.

            Assuming for a moment that legislators could get the backing of voters, and prioritized enforcing violations by counterfeits pharmaceuticals, the difficulties of enforcement would not stop there.  When legitimate pharmaceuticals produce different types of packaging due to repackaging of parallel-traded goods, consumers may not be able to detect counterfeits from authentic drugs.[24]  Additionally, counterfeit drugs may also be mixed with shipments of legitimate drugs, making detection virtually impossible.[25]  Moreover, problems with transshipments are not the only source confusion for consumers of pharmaceuticals. Customers routinely order prescriptions directly from the internet. [26]   These prescriptions may come from pharmacies in Canada or other countries.  Because these pharmaceuticals are shipped directly to the consumer, regulating these shipments is much more difficult than in a “bricks and mortar” pharmacy.[27]

 

How to Stop Counterfeit Transshipments

            With all of the difficulties simply identifying counterfeits, combating them seems to be an impossible challenge. Stopping counterfeit pharmaceuticals needs to be addressed on two fronts.  First, the governments of both developed and developing countries needs to strengthen their intellectual property law in addition to their pharmaceutical regulation (i.e. the U.S.A.’s FDA). Second, companies need to use these laws and technology to ensure that their intellectual property rights are protected and quality control standards in the medicines provided to the public is established.  There is little question that the first step in combating counterfeits is governmental regulation.

            The European Union has made a lot of news recently by seizing counterfeit pharmaceuticals that were transshipped from India.  These seizures were made possible through the authority of COUNCIL REGULATION (EC) No. 1383/2003.  This regulation has some key points that other countries should take under advisement. For example, Article 4 states;

1. …[C]ustoms authorities ,… before an application has been lodged by a right-holder…, have sufficient grounds for suspecting that goods infringe an intellectual property right, they may suspend the release of the goods or detain them for a period of three working days from the moment of receipt of the notification by the right-holder…

2. …[C]ustoms authorities may, without divulging any information other than the actual or supposed number of items and their nature and before informing the right-holder of the possible infringement, ask the right-holder to provide them with any information they may need to confirm their suspicions. [28]

 

This law is the first step in giving customs authorities a proactive role in preventing counterfeit pharmaceuticals. The regulation at Article 10 continues;

The law in force in the Member State within the territory of which the goods are placed in one of the situations referred to … shall apply when deciding whether an intellectual property right has been infringed under national law.[29]

 

Article 10 is pivotal in allowing the laws of the host state to control what a counterfeit is. This is particularly important with regards to intellectual property rights. Since there can be questions about which country’s definition of IP infringement should apply to products in foreign trade zones, having a definite answer eases commerce.  By expressly stating that customs will enforce the patent and trademark laws of the country the transshipment yard is located in, companies using that yard will have advance knowledge of what rules apply. Such rules make it possible to foresee with fair certainty how a country will behave, and therefore, companies may plan their own affairs on the basis of this knowledge.[30] Council Regulation No. 1383/2003 also has provisions for the destruction of counterfeit goods and strictly limits what can happen to goods after they have been determined counterfeit.[31] Regulations like these help improve the quality of medical care and ensure that patents and trademarks are protected. This is the first step in combating counterfeit drugs, the second steps lies in the hands of drug companies.

            Drug companies have an interest and a duty to protect their patents and ensure that counterfeiters do not soil their name.  The primary way to do this is through technology. Pharmaceutical companies began by making unique pill shapes, then placing holographic images on the packaging. These measures were easily copied by counterfeiters and so a new method is now being used.[32] Sun Microsystems developed a special pharmaceutical–based radio frequency identification (RFID) software for drug authentication. This tool enables drug companies to monitor their product through the entire supply chain.[33] This way, a pharmacy can verify that the pharmaceuticals that they have received are in fact authentic. Other companies have begun labeling drugs with “DNA Codes”. These act like genetic fingerprints to authenticate that the drug is indeed what it says that it is.[34] Still other companies are using a series of codes that you can text message into the drug manufacturer to ensure that the prescription is authentic.[35] Additionally, Pfizer uses its website to inform the public on how to spot counterfeits and what a person should do if they suspect a product is counterfeit.[36] Proactive approaches like these will help maintain confidence in the pharmaceutical industry and ensure that the proper medicine gets to the patients.  Plus, these types of measures will make those individuals who want the authentic drugs less likely to be fooled by counterfeiters.

Conclusion

            Pharmaceuticals are a very profitable and easily copied product that has become the target of counterfeiters. Transshipments are one of the most prevalent methods of introducing these counterfeits into the stream of commerce.  Without some definitive action taken by both governmental authorities, trademark and patent holders, the lives of many patients are being placed at risk.  Substandard pharmaceutical products are more frequently finding their ways into the homes of individuals because of a lack of enforcement. Hopefully in the near future, governments will take initiatives to crack down on counterfeiters.  This will provide for a healthier patient, more confidence in the medical system, and stronger property rights for IP holders.

---

[1] http://en.wikipedia.org/w/index.php?title=Transshipment&printable=yes (accessed Oct. 2, 2009)

[2] Id.

[3] 3M Health Care, LTD v. Grant, 908 F.2d 918 (1990)

[4] Id.

[5]19 U.S.C.A.  81a – 81u (West 2009)

[6] 19 U.S.C.A. § 81c (West 2009)

[7] 19 C.F.R. § 146.3(b) (West 2009)

[8] International Medical Products Anti-Counterfeiting Taskforce — IMPACT, http://www.who.int/impact/en/ (Oct. 1, 2009)

[9] http://www.who.int/impact/events/IMPACTJakarta07MeetingReport.pdf (Oct. 6, 2009)

[10] Quality control is being used here, and throughout this paper, from a healthcare standpoint. This covers aspects that would impede patient recovery, sicken, increase resistance to drugs or kill the patient.

[11] Terminology Matters: The Dispute between India and EU over Generic Drug Transshipments http://blogs.cgdev.org/globalhealth/2009/08/terminology-matters-the-dispute-between-india-and-eu-over-generic-drug-transshipments.php  (Oct. 4, 2009)

[12] Maria Nelson, Counterfeit Pharmaceuticals: A Worldwide Problem, 96 The Trademark Reporter, Vol. 96, 1068, 1069

[13] Id.

[14] Id.

[15] 21^st Century Health Care Terrorism: The Perils Of International Drug Counterfeiting http://special.pacificresearch.org/pub/sab/health/2005/21st_Century_Counterfeiting_Report2.pdf, Peter Pitts (Sept. 20, 2005)

[16] Maria Nelson, Counterfeit Pharmaceuticals: A Worldwide Problem, 96 The Trademark Reporter, Vol. 96, 1068, 1069

[17] Id. at 1072

[18] Id. at 1069

[19] Id.

[20] Id. at 1070

[21] Id. at 1070

[22] 21^st Century Health Care Terrorism: The Perils Of International Drug Counterfeiting http://special.pacificresearch.org/pub/sab/health/2005/21st_Century_Counterfeiting_Report2.pdf, Peter Pitts (Sept. 20, 2005)

[23] Id.

[24] Counterfeit Pharmaceuticals: A Worldwide Problem at 1070

[25] Id.

[26] Id. at 1084

[27] 21^st Century Health Care Terrorism: The Perils Of International Drug Counterfeiting http://special.pacificresearch.org/pub/sab/health/2005/21st_Century_Counterfeiting_Report2.pdf, Peter Pitts (Sept. 20, 2005)

[28]www.ecta.org/private/REGULATIONS/17-customs%20regulation.doc, Council Regulation (EC) No 1383/2003, Chapter 2, Article 4

[29] www.ecta.org/private/REGULATIONS/17-customs%20regulation.doc, Council Regulation (EC) No 1383/2003, Chapter 3, Article 10

 

[30] F.A. Hayek, The Road to Serfdom 80 University of Chicago Press 1994 1944

[31] www.ecta.org/private/REGULATIONS/17-customs%20regulation.doc, Council Regulation (EC) No 1383/2003, Chapter 3, Articles 11 & 16

[32]Julian Harris,  http://www.policynetwork.net/uploaded/pdf/keeping_it_real_2009.pdf, Keeping it Real, Combating the Spread of Fake Drugs in poor Countries, p. 20 (Oct. 1, 2009)

[33] Maria Nelson, Counterfeit Pharmaceuticals: A Worldwide Problem, 96 The Trademark Reporter, Vol. 96, 1068, 1081

[34] Id.

[35] Julian Harris, http://www.policynetwork.net/uploaded/pdf/keeping_it_real_2009.pdf, Keeping it Real, Combating the Spread of Fake Drugs in poor Countries, p. 21 (Oct. 1, 2009)

[36] Maria Nelson, Counterfeit Pharmaceuticals: A Worldwide Problem, 96 The Trademark Reporter, Vol. 96, 1068, 1082