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Access to Medicine: Moral Imperative and a New Consciousness - Part 4
- Jenik Radon, Adjunct Professor of International and Public Affairs, Columbia School of International and Public Affairs
- Maree Newson, Associate (NZ Qualified) Radon Law Offices, New York

This series of articles looks at “access to medicine” as a human right, with a focus on what access to medication could look like in the real world. In the last issue, we discussed what illnesses might trigger that human right and what medicines are “essential”. In this issue, we explore who should pay for drugs when patients cannot afford them.

The needs for access to medicine might be met through international private and public donations of medicines or money. But the time, quantity, and extent of these contributions are an unpredictable and not assured form of assistance.

Accordingly, such help does not present a continuous or sustainable approach. Reports abound from NGOs that contributions are not adequate and from such international organisations as the UN that counties have not honored their support commitments.

Although access to medicine is not the pharmaceutical industry’s sole responsibility, it does affect how the industry is viewed. It impacts its brand. Actively engaging in providing access to patented medicines can both improve a company’s image and thereby increase the value of the corporate brand and also allow a company to itself set the terms upon which that access is created.

The Pharmaceutical Industry — A Standard Business or a Special Business?
In the PMA case, the plaintiff pharmaceutical companies’ complaint was not just a public relations failure but also failure to understand that pharma products are not ordinary every-day commodities.

The pharmaceutical industry seeks like any other business and industry to earn a profit for its shareholders and, in this regard, competes with all other businesses ranging from Microsoft to Chevron to Ford for investors. Yet the pharma industry is unlike these businesses as its products impact us very personally. They are consumed around the world by persons, who may include our parents, our children, and our friends, for one purpose only: to restore (or maintain) their health. Does focusing on health place any special responsibilities on the pharma industry?

With the adoption of the UN Declaration of Human Rights in 1948, the right to medical care has received expanded recognition and is acknowledged as a human right under Article 25 of the Declaration. Admittedly political rights, as freedom from torture, as embodied in the 1966 International Covenant on Civil and Political Rights (“the Political Covenant”) have become the standard by which the United States and other western nations judge other nations human rights compliance. But political freedoms are literally a low-cost right as they do not impose any significant economic burdens on nations or their governments to ensure their compliance.

Such an obligation can be described as a passive obligation as political freedoms require governments to refrain from certain actions such as the imposition of restrictions on press freedoms. Accordingly, compliance can be relatively easily monitored and determined.

However, the realisation of the human right to medical care as embodied in Article 12 of the Social Covenant imposes an affirmative obligation on the ratifying nation, namely financial commitments. The Social Covenant states that the ratifying nations, which still do not include the United States, “recognise the right of everyone to the enjoyment of the highest attainable standard of physical and mental health” and specifically imposes on such nations the obligation to create the “conditions which would assure to all medical service and medical attention in the event of sickness.”

The provision of such medical service, which includes pharmaceutical products, will invariably impose costs, even if only to the extent of the “maximum of [a nation’s] available resources,” on an individual government as it seeks to implement this obligation. Moreover, there is no obligation on the international community to assist another nation to meet its obligations other than to provide undefined economic and technical assistance.

Accordingly, the pharma companies in the PMA case were effectively asking the South African government to ignore, if not violate or neglect, its international human rights obligations as embodied in the UN Declaration of Human Rights and the Social Covenant. Moreover, that approach failed to recognise that the public viewed the pharma business as comparable to that of hospital services.

Consequently, the pharma industry has been subjected to a normative push that, like hospital services, drugs should be made available at least, in emergency situations. Pharma companies are providers of some of the medical services that the governments are expected to make available. This fact alone may place pharma companies in a special situation and differentiates the pharmaceutical industry from nearly all other industries, admittedly not without controversy. But an articulation of the specifics of that special responsibility is still open to international public debate, as well national debate, especially in the US, which at times is emotionally charged and is certainly intense.

Pharma Setting its Own Terms through Tiered Pricing
A country’s government is the primary duty bearer for access to health care, but the pharmaceutical industry will inevitably carry some of the cost. How much of the burden private industry will bear is hard to predict based on international agreements alone, but if pharmaceutical companies proactively develop access programmes, they will at least have a role in setting those terms.

The Doha Declaration and the 2005 amendment to TRIPS make clear that countries can compulsory license medicine when necessary and can import those medicines from another country if lacking its own manufacturing capability. TRIPS Article 31 lays out the rules for compulsory licensing, but its provisions are ambiguous about how these compulsory licensing will affect patients and pharma.

As a result, developing countries have the opportunity to define for themselves when a public health need warrants breaking patent protections.

Moreover, when a compulsory license is granted, TRIPS requires “adequate remuneration” to the patent owner but does not specify a way to determine the amount of that remuneration. Furthermore, although a country with a health emergency can import medicine from another member country, countries may be reluctant to assume such a supporting exporting role.

Countries, like Thailand as already noted, risk being branded intellectual property violators if they use compulsory licensing to address their own health problems. These potential exporting countries may be even more reluctant to grant compulsory license in order to address the needs of another country, although India, which has a significant pharma generic industry, does appear ready to accept such a role. TRIPS gives a country the power to provide patented medicines to its people at affordable prices, but it is unclear when a pharmaceutical company’s patent should be disregarded, how much the company will be paid, or, in some instances, where the medicines will be manufactured.

Rather than rely on TRIPS, pharmaceutical companies can set their own prices and other terms for providing access to medicine. Tiered pricing, for example, allows drugs to be made available to different countries or different segments within a country at lower or higher prices depending on income. As a result, the poorest countries will pay the lowest prices.

On the other hand, any loss of profit would have to be made up in the developed countries, thereby subsidising access to medicine by raising drug prices in wealthier countries, which may well ignite controversy in the future as the costs of providing medical care to aging societies continues to rise. Some economic studies have shown that tiered pricing, which may appear unfair in its income price discrimination, ultimately delivers more drugs to more people and therefore provides an overall societal benefit.

One implementation of a tiered pricing strategy for AIDS medicine is worth noting in more detail. The pharmaceutical company, Gilead, holds patents to major HIV/AIDS antiretroviral drugs and has led the way in developing a model to deliver its medicines to low-income countries that is both sustainable and still creates profit where possible. Gilead’s first antiretroviral medicine was approved by the FDA in October 2001, six months after the PMA lawsuit was withdrawn.

In 2003, Gilead started a programme to increase access to medicines to make its products accessible to all patients who need them. This access programme both guarantees that the drugs will be available and allows the patent holder to set the price at which it will be compensated. Additionally, because the patent holder has control over the price of the drug in low-income countries, there is less of a need, if any, to raise prices in high-income countries.

The Gilead access programme focuses on countries most affected by the HIV/AIDS epidemic and uses several strategies to increase access to its HIV medications. Its pricing is tiered and is based on a country’s economic status and its HIV prevalence. Gilead administers its programme by categorising countries as either low income or lower middle income. If a country has a gross national income of less than USD 1,000, then it is deemed to be low-income, and in that case medicines are sold to local distribution partners at no profit. In lower middle-income countries, with a gross national income of more than USD 1,000 but less than USD 3000, medicines are sold to local distributors at a low profit.

In all, Gilead sells its products through eleven distributors, reaching 130 countries. Gilead also encourages competition with its brand distributors by licensing to generic manufacturers. Gilead has licensing agreements with thirteen generic manufacturers in India for production and distribution in India and exportation to low-income countries.

In addition to selling vital drugs at a low price, Gilead’s model generates competition with generic manufacturers. As a result of this competition, the prices of both the generic drugs and the branded drugs are kept low.

Arguably, generic companies could produce drugs under a compulsory license and sell at a relatively low price to a greater portion of a specific national market. But as discussed, it is not at all clear that a WTO member country with such production capacity would respond to another nation’s use of compulsory licensing by exporting AIDS medicine to that nation.

Gilead, however, has assured the availability of its medicine at low or affordable prices and licensed generic manufacturers to produce it for sale to lowincome nations, which has the additional benefit that Gilead as licensor has a stake in ensuring production quality as the medicine is sold under the Gilead name.

Additionally, the Gilead model is of note because the drug developer shares in the modest profit made in middle-income countries instead of only the generic manufacturers. By adjusting prices on its branded medicines and encouraging generic versions, Gilead has made significant progress toward creating a working and marginally profitable structure for selling HIV drugs to developing countries. But yet the Gilead model has not become an industry precedent, which is not to say that other pharma companies do not provide some form of access to medicine to people in developing nations. But a world-wide pharma industry access to medicine system is still lacking.

In the next issue, we introduce a new framework for thinking about pharma corporate responsibility and the need for a new code of ethics.