PHM-Exch> TRIPS Council will discuss transparency on R&D costs and prices & use of TRIPS flexibilities for access to medicines

[Claudio Schuftan]

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From: South Centre <south at southcentre.int>

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SOUTHNEWS
No. 288,  16 October 2019

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*The WTO TRIPS Council will discuss measures to increase transparency on* *R&D
costs and prices and experiences of the use of the TRIPS flexibilities that
have promoted access to medicines*


*The World Trade Organization (WTO) TRIPS Council (TRIPS – Agreement on
Trade-Related Aspects of Intellectual Property Rights) will discuss in its
session on 17 October the need for transparency regarding research and
development (R&D) costs and prices for medicines. Under the agenda item of
intellectual property and the public interest, South Africa (SA) submitted
a communication to inform the discussion.  The SA communication calls for
WTO members to commit to the full use of the flexibilities in the TRIPS
Agreement to increase access to affordable, safe, effective and quality
medicines. Countries are invited to share their national experiences on how
TRIPS flexibilities have been used to address high prices and barriers to
access to medical technologies in order to achieve public health and
related national objectives. The South Centre encourages developing
countries to prepare to respond in the TRIPS Council to the guiding
questions in the SA communication and to actively participate in the
discussion. *

*Call to share national policies and experiences to curb high prices and
barriers to access to medicines*

The communication by South Africa (SA) to the World Trade Organization
(WTO) (IP/C/W/659) echoes the growing international concern about the lack
of transparency regarding research and development (R&D) costs and prices
for medicines, and how pharmaceutical companies and healthcare providers
that hold monopolist positions can reduce public welfare by charging high
prices. The communication by South Africa invites WTO members to share
their national experiences to curb high prices and diminish barriers to
access to medicines and medical products. For this purpose, it offers a
number of guiding questions:

   - What are countries’ experiences with escalating prices of patent
   medicines and their policy responses to address this trend through the use
   of TRIPS flexibilities? What are the TRIPS Flexibilities adopted by Members
   in their patent laws to ensure availability of patented medicines at
   reasonable prices? What are the national experiences on efforts to improve
   the transparency of patent landscapes to ensure that no barriers are
   created to generic competition?
   - What approaches have Members implemented regarding price regulation of
   patented medicines (e.g. combination of cost-based pricing, value-based
   pricing, reference pricing, and/or through tendering and negotiation, and
   regulating mark-up levels)? What are the results and challenges that
   Members face to ensure compliance and disclosure of necessary information
   or their effect on the prices of medicines?
   - What are the measures implemented to enhance the publicly available
   information on the costs of manufacturing, in particular information on
   grants, tax credits or any other public sector subsidies and incentives
   relating to the initial regulatory approval and annually on the subsequent
   development of a product or procedure?


*Reinforce commitment to use the TRIPS flexibilities to protect public
health*

The SA communication notes that the international legal framework requires
governments to make full use of TRIPS Flexibilities to increase access to
medicines for all, including the targets of the Sustainable Development
Goals (SDGs) of the 2030 Agenda for Sustainable Development. It also
recalls that the protection and enforcement of intellectual property (IP)
is not an end in itself, and that Article 7 of the TRIPS Agreement links IP
to the promotion of technological innovation and the transfer and
dissemination of technology.

The SA communication further recalls the Doha Declaration on the TRIPS
Agreement and Public Health´s call for countries to make full use of the
Agreement´s flexibilities, as well as the report of the United Nations
High-Level Panel on Access to Medicines (2016) that examined the
incoherence between trade, IP, human rights and public health.

*IP incentives deficient for R&D in diseases that mainly affect developing
countries *

The SA communication also points to the deficiencies of the current model
of R&D and medical innovation. It notes that the current model is
ill-equipped to address current health burdens, particularly for developing
and least developed countries. It notes that Target 3.b of the Sustainable
Development Goals underscores the importance of support for R&D of vaccines
and medicines for communicable and non-communicable diseases that primarily
affect developing countries.

*Increase transparency on R&D costs and prices*

The SA communication recalls the recently approved Resolution WHA70.12 on
transparency in the pharmaceutical sector, in particular the increasing
costs of new pharmaceutical products for cancer treatment in recent years.

It notes that while many WTO Members have implemented policies to deal with
the pharmaceutical sector, pricing policies of private enterprises remain
opaque and differ from country to country, affecting procurement and
government policies. Thus, the SA communication stresses that transparency
is a central component to inform decision-making, noting that *“the true
costs of R&D for pharmaceuticals are often unknown and highly variable,
while the contribution made by public and non-profit-making sectors towards
the R&D of medicines is not always accounted for”. *The SA communication
recalls that the lack of data to assess costs is also noted by the
trilateral study prepared by WTO, the World Intellectual Property
Organization (WIPO) and World Health Organization (WHO) on IP and Public
Health, and further states that production costs of medicines can be
relatively small while many of the costs are related to marketing and
promotional activities.

The SA communication notes that the lack of transparency in R&D costs is
also associated to various practices by companies in the health sector that
may lead to market dominance, including IP strategies such as patenting of
combinations and minor variations of existing products. Anticompetitive
practices result in reduced general welfare caused by higher prices and
less overall economic efficiency. Therefore, addressing the abuse of IP
rights remains a relevant tool to ensure cheaper and effective access to
medicines and health technologies, argues the SA communication.

*South Centre support on use of TRIPS flexibilities*

The South Centre welcomes the initiative led by South Africa to have a
substantive and informative discussion in the WTO TRIPS Council among
Members, based on their own experiences, to increase their commitment to
make use of the TRIPS flexibilities, as well as policies for increasing
transparency of R&D costs and prices, as legitimate means to promote access
to medicines and other health technologies. The South Centre provides
technical assistance on the use of TRIPS Flexibilities for developing
countries in order to improve access to medicines and medical technologies,
and foster competition. For more information and inquiries (open to all
developing countries policymakers of any agency/occupation), please refer
to: https://ipaccessmeds.southcentre.int/
<https://southcentre.us5.list-manage.com/track/click?u=fa9cf38799136b5660f367ba6&id=dabe0f98cb&e=4fac633f11>
.


The communication by South Africa can be found here
<https://southcentre.us5.list-manage.com/track/click?u=fa9cf38799136b5660f367ba6&id=833e095998&e=4fac633f11>
.


*Authors: Vitor Ido is Programme Officer and Viviana Munoz-Tellez is
Programme Coordinator of the Health, Intellectual Property and Biodiversity
(HIPB) Programme of the South Centre.*
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