A Global Village
Issue 5 » The Right to Health

Patently Unfair?

Joseph McArthur, University College London

It can’t be denied that there are huge gaps in healthcare provision across the world. The reason for the gaps in coverage of essential medicines, such as antiretroviral drugs (ARVs), is largely money. In the UK around £2000 is spent per person per year on healthcare by the government; in low-income countries about £20 is spent1. At this level of expenditure many treatments are inevitably unaffordable.

This leaves the burden of paying for treatment squarely on the shoulders of patients in these countries, amounting to approximately £6000 on average per person annually. The result of this disparity is unimaginable human suffering and millions of unnecessary deaths.

This article will focus on how to increase access to medicines by decreasing the cost of drugs through various means, exploring the role of patent pools, tiered pricing, global access licencing along with voluntary and compulsory licensing as methods of lowering prices.

Of course, the price of drugs is only part of the story. Many other factors such as a difficulty distributing drugs can lead to people not receiving the treatments they need. Furthermore, global health is an extremely complex issue, with other basic needs such as clean water and proper nutrition greatly affecting health outcomes.

Firstly, it is important to explain why prices can be so high for drugs that often do not cost much to manufacture. Drugs discovered in universities follow a similar route to those with origins in pharmaceutical companies. The exact number of drugs originating from universities is debatable, but is around 50% of all drugs that make it to market in some sectors2.

Companies allow an
independent organisation
to group their patents
together with other
companies’ patents in a
Patents can then
be licenced from the
patent pool to any
generic pharmaceutical
company in a developing
country and produced.

The normal procedure is that when a researcher discovers a promising compound in a university it is patented, with the help of the technology transfer office. Then, as drug development can be extremely expensive and is often risky, the patent is licensed to a single pharmaceutical company that takes the compound to market. Depending on how long it takes to perform clinical trials and whether more patents are applied, the pharmaceutical company has approximately 15 years within which they have a monopoly on the sale of the drug, often charging high prices and leaving vulnerable populations without access.

Patent Pools
The most well-known mechanism for reducing the cost of drugs is through the use of patent pools. Here companies allow an independent organisation to group their patents together with other companies’ patents in a pool. These patents can then be licenced from the patent pool to any generic pharmaceutical company in a developing country and produced. The patent pool is also accessible to researchers. This is essential as to treat HIV many drugs need to be taken, usually around three at once. This can mean you need to take a lot of pills at different times of the day, which can make it difficult to adhere to the course; resulting in resistance to the drugs and causing patients’ health to deteriorate. Using patent pools makes it far easier to combine all these pills into one pill, making it much simpler for people to continue treatment. The patent pool is also crucial for developing drugs for children. Ninety per cent of the 2.5 million children3 with HIV live in sub-Saharan Africa, rendering them an unappealing market for drug development. As a consequence they must use drugs designed for adults, which are often harmful. This leads to less than 50% of children with HIV seeing their second birthday, and the ones that do are underweight, have stunted growth and often suffer from other infections4.

One of the sticking points
in negotiations between
the patent pool and
companies is the price
middle-income countries
should pay for medicines

There currently exists a patent pool for HIV medicines, called the Medicines Patent Pool (MPP). It was recently successful in persuading Gilead Sciences to enter the patent pool, joining the US National Institute of Health, making it the first major pharmaceutical company to do so. Gilead Sciences placed Tenofovir, a crucial Anti-HIV drug, a hepatitis B treatment and three promising HIV treatments still in development in the pool. One of these is a combination pill, combining four drugs in one pill. This move enabled generic production in exchange for a royalty and development of a new paediatric drug without royalty. Gilead should no doubt be praised for this move; however the deal does not allow access to their drugs in many middle-income countries home to huge numbers of impoverished people who need treatment. The MPP is still in negotiation with many companies, while others simply refuse to start discussions.

Challenges Ahead
The MPP faces major challenges in facilitating a functional patent pool. Many ARV producers have ignored calls from the World Health Organisation, the G8, and many humanitarian groups to join, claiming they are already doing enough. They believe using tiered pricing and voluntary licencing allows sufficient access. Voluntary licencing is where, instead of giving licences to the patent pool, a company will give them to specific generic producers. This allows generic production, but only by a limited number of companies, in a small number of countries. This means that the price reduction is a fraction of what it could be if broad patent pool were used. Tiered pricing involves charging high prices to high-income countries, lower prices to middle-income countries and lower still prices to low-income countries. The main problem with this strategy is that even when at cost pricing is used,, many drugs remain inaccessible to those who need them. Having generic companies compete has been shown to be much more effective than tiered pricing at lowering prices.

One of the sticking points in negotiations between the patent pool and companies is the price middle-income countries should pay for medicines – a significant question as they are home to half the world’s population including 75% of people who live in extreme poverty. Pharmaceutical companies say that they should pay higher prices as many citizens are wealthy enough to pay, and so they are often excluded from licencing deals and do not benefit from tiered pricing. A recent survey from MSF showed a “growing and deadly divide in prices for antiretrovirals offered to the poorest countries versus low and middle-income countries” through tiered pricing schemes5.

Compulsory licencing, allowed by several international agreements, is an effective, but rarely used mechanism to slash drug prices. During national emergencies, or where supply fails to meet demand, governments can issue a compulsory licence. This allows patent laws to be completely ignored for the drug in question, allowing it to be made or imported very cheaply. This is rarely used as the trade and economic repercussions can be severe.

Access For All
Another promising method for increasing access to not just medicines, but vaccines, biologics, diagnosis techniques and other medical techniques is the use of Global Access Licences (GALs). The main use of these has been in universities, however the basic principles are applicable in many situations. As mentioned earlier, when a useful discovery is made in universities it can be patented by the technology transfer office, and usually licenced to a single company. GALs do not change this process, they just add a clause into the licence saying that access must be provided to developing countries via generic production, or another method when this is not possible (as is often the case for biologics due to their complexity). GALs have many advantages. For starters, generic provision for developing countries is guaranteed before the drug is made, removing the need for lengthy negotiation when the drug is brought to market. Global access licencing can also protect discoveries from follow-on patenting. Also, the MPP is focused on ARVs at the moment, whereas GALs can be applied to almost any new idea that can benefit the developing world. Global access licencing has so far been implemented in several universities in the UK, and many more in the US due to campaigning by Universities Allied for Essential
Medicines. Imperial College is not yet amongst these.

Case studies into the effectiveness of GALs show that they can more effective than the traditional method of licencing, especially where developing countries are concerned. Some presumed that GALs would prevent the commercialization of discoveries, but it has been demonstrated not only that the opposite is often true: current procedures can in fact hinder commercialization. Furthermore, creative uses of these licences can attract funds and developers. What pioneering universities have shown is that they can play an important role in improving access to their drugs by using GALs. Indeed, GALs are becoming increasingly important as pharmaceutical companies choose to shut down in house research projects, choosing instead to source drug candidates from universities and biotechnology companies.

GALs have many advantages.
Generic provision for
developing countries is
guaranteed before the drug
is made, removing the need
for lengthy negotiation
when the drug is brought
to market.

An obvious disadvantage of reducing the cost of drugs would be if this resulted in huge losses for pharmaceutical companies and universities; therefore substantially diminishing funds for future developments. Studies into the amount universities make from licences show that, at top universities, technology transfer offices actually cost more to run than they make, or make up a tiny proportion of income6. Furthermore, the proportion of income that comes from sales in developing countries is significantly less, so effects on university balance sheets due to GALs is small. The impact on pharmaceutical companies’ balance sheets from GALs and the patent pool is similarly small. Combined, India, China and South Africa accounted for 1.4% of drug sales in 2010, for members of the Pharmaceutical Research and Manufacturers of America (PhRMA)7. In an industry known for large profits, this is a small price to pay for the commendable act of saving lives. To help reduce this already small impact, royalties are provided to the patent holder on all sales of generic drugs.

The Future’s Bright
Whilst facing continuing challenges in getting medicines to the people who really need them, there is no doubt that progress has been made in the past ten years. Many people now have access to substantially more medications, especially first line HIV drugs, at a much reduced cost thanks partially to the use of methods described above. However, we cannot sit back on our achievements; we must build on them. Many HIV positive people now need expensive second line ARVs as resistance emerges to others. Without these new medicines many people with currently controlled HIV will join others suffering from a myriad of treatable conditions. It is likely that not one single approach, but a combination of all of these methods, will play a role in improving the current situation.

Student groups such as Universities Allied for Essential Medicines, Student Stop Aids Campaign, Friends of MSF and Medsin have an impact on access to medicines and global health, why not join us?


Joseph McArthur is a 2nd year Pharmacology student at University College London and the co-ordinator of Universities Allied for Essential Medicine at University College London.

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[1] WHO (2010) Health Systems Managing: The Path to Universal Coverage.
[2] Global Forum for Health Research (2009) Monitoring Financial Flows in Health Research: Behind the Global Numbers.
[3] UNAIDS (2010) UNAIDS Report On the Global AIDS Epidemic.
[4] PEPFAR (2008) Report to Congress by the United States Global AIDS Coordinator on the Use of Generic Drugs in the
       President’s Emergency Plan for AIDS Relief.
[5] MSF (2011) Caught in the Middle: HIV Medicines Pricing Sky High in Middle-Income Countries.
[6] Sobolski G. K., Barton, J. H. & Emanuel, E. J. (2005) Technology Licensing: Lessons from the US Experience. JAMA.
       294(24): 3137-40.
[7] PhRMA (2011) Industry Profile 2011