The patent system and inhibited access to medicines
Baker believes that the patent system is one of the most significant structures inhibiting access to medicines, as it obstructs the market entry of generic medicines and neglects non-profitable diseases. Baker claims that the current system “distorts research priorities towards medical conditions where maximum profits can be made.” This leads not only to neglected diseases, but to neglected populations. “Even when you have a disease that affects poor people and rich people,” Baker explains, “the focus will be on getting it to the rich people. There’s very little incentive to cater for poor populations.”
Increasingly, there have been calls for new R&D business models which provide alternative rewards for research and delink profits from product sales. Baker adds his voice to these calls. “Instead of everyone digging the same well and making the same mistakes, mainly because of secrecy, we could have more collaboration, the kind of things that made the Genome project work well—sharing resources—that would result in a cheaper research model and better therapeutic outcomes. It wouldn’t be this ‘all or nothing’ kind of system with a huge monopoly with excessive prices.”
For years, the pharmaceutical industry has justified its monopoly profits on the basis that such profits are necessary to recoup R&D expenditure. Baker disagrees. “Pharmaceutical companies spend almost two and a half times as much on marketing as they do on research and development.” Moreover, the marketing is designed not to better inform patients but to seize a greater share of the market. Pharmaceutical companies “don’t have to market their best medicine because doctors will prescribe it and patients will have heard about it. They spend all their money and all their sales force on trying to expand the use beyond the stated indication and trying to gain market share from the other blockbuster that got into the market first. They’ve got this slight advantage they can talk about and that’s what they send all their product detailers out to talk about. We have so much wastage in the system because people are trying to grab a portion of these blockbuster monopolies.”
Given these weaknesses in the patent system, why is the pharmaceutical industry still clinging to a broken model? “It’s the goose that keeps laying the golden egg for them,” Baker explains. “They’ve remained one of the most profitable industries. All the dinosaur industries don’t want to die, even if they don’t make much sense. They have more or less bought governments. You would say so in the US. And when you have the government supporting them and you have a very strong industry…” Baker shrugs, looking resigned.
TRIPS and tools for increasing access to medicines
I shift gears and ask Baker about the TRIPS agreement. Of the various flexibilities available under the agreement, what should developing countries be using to most effectively increase access to medicines? “I think there’s an array of tools,” responds Baker, “and they need to be used in a complementary way.”
“Some of the mechanisms that exist are hard to operationalize on a country by country basis. Cheap medicines are basically the result of aggregated markets. The reason you have low prices on AIDS medicines is that there were a lot of countries that could buy the cheap generics and there was PEPFAR and the Global Fund financing the purchases. So you had buying power, and lots of countries eligible for the low prices, you had a big market that incentivized generic entry, production efficiency and economies of scale. So from my perspective, if you want compulsory licensing to work, you need cooperation on a regional or global scale. You need lots of countries to cooperate on issuing licenses nearly at the same time, if the product is widely patented, so that you can create a large market that incentivizes generic entry and competition. It’s fine if you’re a big country like the US because you have a lot of people and a lot of purchasing power, so issuing a compulsory license on your own is effective. But if you’re in Botswana, a compulsory license means nothing, because a generic company is not going to come on board just to supply 2 million people.”
The 2005 insertion of TRIPS Article 31bis was designed to promote compulsory licensing by allowing developed countries to export low-cost generic drugs to poorer countries lacking manufacturing capacity. So why have few developing countries invoked their rights under Article 31?
“If you want compulsory licensing to work, you need cooperation on a regional or global scale.”
“Most countries don’t have ideal legislation with respect to the standards for issuing compulsory licences or the mechanisms for doing so,” Baker explains. “Most countries don’t have a good description of the full range of grounds upon which compulsory licenses can be issued, for example, excessive pricing, inadequate sources of supply, inability to make needed combinations, et cetera.”
The United States, by contrast, routinely issues compulsory licenses for the use of government-patented inventions. “The US has, in government-use licenses, the absolute easiest mechanism of all,” Baker says. “And they use it all the time. And no one ever talks about the hypocrisy of the United States having this very easy-to-use system that they use a lot when they’re complaining about anyone else who uses compulsory licensing anywhere else in the world. In the US, any government official or any contractor of the federal government can take and use a patent, subject only to notification and eventual payment of adequate compensation. The grounds are only that it’s for government use.”