Statement of the United States to WTO TRIPS Council on the Paragraph 6 System

The following statement was delivered by USTR at the WTO Council for TRIPS Annual Review of the Paragraph 6 System on Wednesday, 27 October 2010.

Statement of the United States
Agenda item F, Annual Review of the Paragraph 6 System
Topic 5

Mr. Chairman

We are pleased to be here today to participate in the annual review on the implementation of paragraph 6 of the Doha Declaration.

The TRIPS Agreement provides an important balance between providing incentives to research and develop new medicines and promoting access to existing patented medicines. According to the Doha Declaration on TRIPS and Public Health of 2001, the TRIPS Agreement “does not and should not prevent members from taking measures to protect public health.”

The United States is a global leader on improving public health. U.S. funding for global health has increased significantly over time, particularly in the last decade; funding more than doubled in fact between FY 2004 and FY 2008, reaching $9.6 billion in FY 2008. In 2009, the United States was the largest donor in the world for the global response to HIV/AIDS, accounting for more than half of disbursements by governments. In fact, without U.S. funding, international AIDS assistance from donor governments would have significantly declined between 2008 and 2009.

As part of the U.S. Government’s global health programming, we are committed to promoting equitable access to safe and effective medicines of assured quality around the world. We are also fully committed to helping countries that are experiencing public health crises find real and comprehensive solutions to these situations.

As one element of these efforts, the United States strongly supported the General Council’s decision of August 2003, to implement the Doha Declaration on TRIPS and Public Health to allow drugs to be exported under a compulsory license under the terms set out in that decision and the accompanying Chairman’s Statement. The United States also lent strong support to the General Council’s Decision of December 6, 2005, to amend the TRIPS Agreement and make permanent the system and appropriately preserve reference to the Chairman’s Statement. Now, it should be recalled that the Doha Paragraph 6 Solution was the result of robust discussions and attracted the consensus of the Members; other prior proposals were left behind. In fact the United States was the first Member to notify its acceptance of the amendment.

Mr. Chairman, the paragraph 6 system is intended to be one tool to assist in promoting access to medicines and provides an important failsafe in our work to improve access to medicines. This safety valve, however, can be only one tool.

In the past, some delegations have shared their view that the paragraph 6 system has been used sub-optimally and that an analysis of this possibility is needed. As we have affirmed at previous meetings of this Council, this annual review was precisely the place that WTO Members intended reviews of the operation of the paragraph 6 system to be conducted, and this is the place where Members – who are the users of this inter-governmental system – should share their experiences regarding any concerns arising out of the operation of the paragraph 6 system.

In that connection, the United States is pleased to participate in this discussion today. We have listened with great interest to the presentations provided by other Members on the topics that have previously been discussed.

As in the past, we have taken note of the importance that some delegations have attached to the fact that the paragraph 6 system has been used as such in one instance.

Concerning the number of actual uses of the paragraph 6 system, we submit that this number is not the right metric to measure the effectiveness. We must evaluate the results that matter – i.e., we need to look at the extent to which medicines are reaching the affected populations. In that connection, the number of times that Members have relied on this safety valve mechanism does not simply provide the right focus.

Instead, the paragraph 6 system should be viewed in its proper, larger prism. This principle is reflected in paragraph 2 of the Doha Declaration, and that wider national and international action is where we would like to build today.

As an initial matter, as mentioned by our colleagues at the WHO Secretariat, we should not lose sight of the fact that the majority of the drugs on the World Health Organization’s Model List of Essential Medicines are off-patent.

Additionally, it is also important to recall that the paragraph 6 system’s development was one element of a larger international exchange of ideas that WTO Member governments, the donor community, companies, and other stakeholders have had – and are having – in order to improve access to medicines.

And as I will discuss shortly, it is that work that has led to real and measurable progress over the past decade in improving access to medicines. Further, it has led to partnerships – between governments, between governments and stakeholders, and between stakeholders themselves.

And today I would like to share information on some of those efforts as part of the annual paragraph 6 review. First, I will discuss some of the results that this exchange of ideas have resulted in, and second, I will also discuss some long-running problems that have hampered the efforts to address the issues as well as solutions to these problems that are emerging.

In our discussions with stakeholders across the spectrum, we have consistently heard that access to medicines is in fact being improved through numerous means.

These means include developed country policies and programs that place greater emphasis on building sustainable capacity in the public sectors of our partners and at their national and community levels to provide basic services over the long term.

These means include efforts to expand research and development of innovative drugs and production capacity for both innovator and generic drugs in developing countries.

These means also include donations of health products by WTO Members, the private sector, and international bodies, and, finally, tiered pricing, bulk purchase mechanisms, innovative licensing models and other measures by innovative and generic companies and multilateral bodies.

In fact, as one example of such means, the United States through our National Institutes of Health (NIH) was the first patent holder to share its patents with the newly established Medicines Patent Pool Foundation. The initial contribution by the NIH and its co-patent owner the University of Illinois at Chicago embodies these commitments and takes an important step toward making affordable and appropriate HIV medicines available to patients around the world. It builds on our President’s previous commitment to support humanitarian licensing policies to ensure that medications developed with U.S. taxpayer dollars are available off-patent in developing countries.

Let me next address some of the measures undertaken by innovative and generic companies to meet the needs to LDCs and others.

First, in many cases, innovator companies simply do not apply for patent protection in many developing countries.

Second, there has been widespread tiered pricing of pharmaceuticals tied to individual and sub-regional developing country markets. Tiered pricing is linking the price of a pharmaceutical in a market to what the consumer or purchasing government can afford to pay. While tiered pricing is not a new strategy, its frequency of use has dramatically increased in the past decade. For example, we understand that Bristol Myers Squibb, partnering with many Health Ministries, announced a number of years ago that it would make all of its HIV medicines available at no-profit prices in sub-Saharan Africa. We also understand that in 2005, the company announced that pediatric formulations would be priced below cost, in order to further reduce barriers to provide access to this treatment. We understand that other companies, such as GlaxoSmithKline have a similar offer, wherein certain antiretroviral drugs are offered at not-for-profit prices in 64 different countries. Further, a number of other companies are reportedly working together to provide a “single tablet a day” product at significantly reduced prices.

These examples make clear that private actors are improving access to medicines in a manner that simply wasn’t present five to seven years ago.

Next, another action undertaken by patent owners are partnerships with generic manufacturers. Many patent owners report that they have partnerships with generic manufacturers to make their products more generally available. And they rely upon these generic manufacturers, often in developing countries, to scale up their manufacturing.

One example of this type of partnership is that between Gilead, an innovative pharmaceutical company, and Indian and South African generic manufacturers which has increased the number of people receiving its various treatments from 100 people in 2003, the time of the Doha declaration, to 700,000 people in 2010. Gilead has entered into licensing agreements with these pharmaceutical companies to transfer its patented technology for the formulation of the medicine. These treatments address HIV infection and chronic Hepatitis B in adults.

With respect to its Indian partners, Gilead has entered into licensing agreements to produce and distribute a generic version of the drug to 95 low-income countries much earlier than otherwise would be possible, due to India’s production capacity and capable generics industry.

The licensing revenue from these agreements is also reinvested to fund medical education, safety reporting, and product registration/marketing approval in destination markets.

This is only one example of an increased collaboration between innovative and generics companies, especially through non-exclusive voluntary agreements. A number of companies around the world have granted licenses to generic pharmaceutical companies to make generic versions of their drugs. We understand that licensing contracts are being explored by pharmaceutical companies in Bangladesh, Ethiopia, Kenya, Tanzania and Zimbabwe, as well as other countries.

Another example of a partnership between innovators and generics is the global Meningitis Vaccine Project (MVP). The MVP was established in 2001, using technology licensed by the U.S. National Institute of Health (NIH). In 2001 and 2002, the MVP approached various vaccine manufactures, seeking a manufacturer who could agree to manufacture the vaccine for 50 cents a dose, the price that NIH had been told by countries in Sub-Saharan Africa was necessary for the vaccine to be affordable in their marketplaces. The Serum Institute of India accepted the challenge, and after about eight years of work, began to ship the vaccine to Mali, Burkina Faso, and neighboring Niger last month.

This eight year lag does go to the larger point – the procurement of medicines is a long process, so that any measure of length of obtaining a license under the paragraph 6 solution should take this into account.

The results of this collaboration speak for themselves. With respect to this MVP project, over a recent 17-day period, over 1 million people were vaccinated. The target is to eventually distribute 40 million doses.

The Gilead and MVP approaches are just two examples of partnership trends that are increasing and delivering real results. And once again, these approaches did not exist 10 or 15 years ago. There are many such cutting edge partnerships that are promoting access to medicines. Other similar partnership trends that have been reported to include:

  • An increase in the number of research collaborations targeting areas of need; and
  • Increased voluntary sharing of intellectual property, such as “compound libraries” for research purposes. For example, one company has launched a knowledge pool, now run independently by a third party, that places approximately 80 patent families in a pool to help others develop new medicines for neglected diseases.

In addition to collaboration with innovator companies, the generic drug industries have also had a significant role to play in improving access. For example, generic companies are engaging in more research activities for adapting existing products to the needs of developing countries as well as assisting in capacity advancement in poor countries.

Many of these partnerships also provide jobs, access to doctors and nurses, and training for medical staff, schools and hospitals.

We must underscore that the ability to patent the invention is a critical piece of ensuring that not only that there is an incentive for developing the medicine, but also that its benefits can be shared widely. The development of new, life-saving drugs is a risky and expensive process, and it is necessary to provide incentives for the private sector to undertake this effort. Intellectual property rights are essential to provide this incentive so that new drugs can be brought to the market.

Moreover, patent systems can provide important incentives to reward innovators who identify ways to adapt medicines to many different challenging circumstances, such as a lack of refrigeration or a need for more patient-friendly ways of administering a drug that may be particularly relevant in developing country markets.

As we have just discussed, there are many actors working to promote access to medicines. The intellectual property system plays a critical role in assisting this effort. But time has shown that intellectual property rights are often not the determining factors in the larger issue of access to medicines, as has sometimes been asserted.

I would like to review for a few moments some of the more fundamental problems that hamper access. I would also like to highlight some solutions that have been found in various contexts.

Many complex factors hamper access to medicines in developing countries, including sub-optimal procurement systems and poor distribution networks for medicines, caused by lack of basic infrastructure, hospitals, clinics and healthcare professionals, among others.

The goal of equitable access to medicines is not achievable or sustainable without fostering improvements to the health systems themselves to ensure that patients can actually receive and be administered the drugs.

Additionally, systemic problems and taxes and tariffs on imported medicines, and a lack of cold-chain storage, are often overlooked problems in many multilateral discussions.

Let me elaborate; and some of these have already been touched upon by our colleagues in the WHO Secretariat.

Problems

In some cases, taxes or tariffs are levied on products being supplied at cost or on donated products, the cost of which is passed directly to patients.

Often health care is delivered far from the community being served.

Weak drug procurement and delivery systems are another barrier to access to medicines. Lack of transportation and infrastructure also make it difficult for a patient to go to the doctor as well as for the distribution of pharmaceutical products. Backlogs, regulatory redundancy, as well as other non-tariff barriers also hinder the distribution of both generic and innovative drugs where they are most needed.

Finally, if the healthcare system is flooded with counterfeit products, true access is not achieved. Because of weak regulatory regimes and global criminal networks, counterfeit and substandard medicines, harm or kill sick people across the globe, with the developing world disproportionately affected. In fact, the WHO estimates that “in over 50% of cases, medicines purchased over the Internet from illegal websites that conceal their physical address have been found to be counterfeit.”

These are all problems that can be solved. Many of the issues will require action on the parts of both developed and developing countries. It is clear, however, that without accounting for the full range of problems that exist, we cannot make the improvements that will foster improved access.

Solutions

And now, I would like to discuss a few of the solutions with which the United States is involved

On September 22, President Obama announced a new U.S. global development policy – the first ever for a U.S. Administration. Through the policy, President Obama has made clear that sustainable development is a long-term proposition, and progress depends importantly on the choices of political leaders and the quality of institutions in developing countries. Where leaders govern responsibly, set in place good policies, and make investments conducive to development, sustainable outcomes can be achieved. Where those conditions are absent, it is difficult to engineer sustained progress, no matter how good our intentions or the extent of our engagement.

Significantly, the policy places greater emphasis on building sustainable capacity in the public sectors of our partners and at their national and community levels to provide basic services over the long-term. The United States will continue to provide medicine, emergency food aid, humanitarian relief and other assistance where it is desperately needed. But we will also strive to help increase the capacity of our partners to meet those needs by investing in systemic solutions for issues such as service delivery and public administration

President Obama’s six-year, $63 billion Global Health Initiative (GHI), focuses on sustainable service delivery where the needs are greatest and the conditions are right to build effective health service delivery systems.

As to shortages of skilled health care professionals, the U.S. Government, as well as many private companies, has undertaken significant efforts to improve healthcare systems in developing countries. In the President’s Emergency Plan for AIDS Relief (or PEPFAR) and the President’s Malaria Initiative, the U.S. is training a significant number of health workers in support of sustainable health systems. We are also a leader in the implementation of task-shifting initiatives in Africa.

The PEPFAR, the largest component of the GHI has, since its inception, promoted access to medicines and other products through many means, including by improving supply chain management. This approach is saving lives – through PEPFAR, 2.5 million people are being supported for life-saving anti-retroviral treatment.

Additionally, the PMI is working to improve access to malaria medicines through their procurement and distribution in the 15 PMI focus countries (Angola, Tanzania, Uganda, Malawi, Mozambique, Rwanda, Senegal, Benin, Ethiopia, Ghana, Kenya, Liberia, Madagascar, Mali, and Zambia), distributing over 80 million treatments.

With respect to government tariffs, as part of the WTO NAMA negotiations, Switzerland, Singapore, the United States, and Chinese Taipei have proposed an Enhanced Healthcare initiative for members to jointly reduce or eliminate tariffs on medicines and key medical equipment and supplies. We hope that other members will join in this effort, as it will result in lower medicine prices, and benefits to all.

Similarly, the use of transparent, competitive and non-discriminatory procurement procedures and practices in procurement of pharmaceuticals will provide governments with more choices from a broader array of suppliers that can mean lower prices and more effective use of limited taxpayer dollars.

In closing, access to medicines is a complex issue that requires a multifaceted approach and often multi-sectoral approach that works to address all aspects of the situation in a meaningful way. The paragraph 6 system must be located in this larger prism. Today, we have shared our experiences on approaches that are producing results. We hope that this helps inform Members’ consideration of this issue. These approaches are an illustration that we should not focus on the single reliance on paragraph 6 as a proper or meaningful gauge of the operation of the paragraph 6 system.

Thank you, Mr. Chairman.

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