At a time when there is an urgent need to expand AIDS treatment worldwide, financing for the Global Fund for AIDS, TB, and Malaria is decreasing and budgets for AIDS are under tremendous pressure in donor countries and in many of the most affected nations of Africa and Asia.
Faced with this dilemma, AIDS program managers and advocates must pursue all measures that can keep the cost of treatment low and affordable.
In addition to the actions that are already being taken -- like having African governments and donors buy AIDS drugs in bulk from suppliers in order to obtain better prices -- could a "patent pool" for new drugs help to make AIDS treatment more accessible?
Several AIDS treatment and advocacy organizations like Médecins Sans Frontières and Knowledge Ecology International started arguing a few years ago that this was the case. Without a patent pool, they said, some new and existing AIDS drugs (anti-retrovirals, or ARVs) would begin to be patented in developing countries, making them too expensive for patients in poor countries.
That is because, starting in 2005, the current global accord on intellectual property (IP) requires countries like India, which previously allowed its generic companies to "copy" drugs that were patented abroad, to accept patent applications for medicines, including those for AIDS treatment. Patent protection could block generic production, leaving the multinational companies that hold the patents as the only sellers in the market, able to charge higher prices for their products. Although many of the ARVs in widespread use in low- and middle-income countries now are already off-patent, the new and better drugs that are still needed, particularly as patients develop resistance to the widely used first-line ARVs, would be subject to patent protection.
In response, in 2010 the Medicines Patent Pool (MPP) was created by UNITAID, an organization based in Geneva that pays for medicines used to treat AIDS, malaria, and resistant strains of tuberculosis.
To create a patent pool, the plan is for the MPP body to negotiate with pharma companies to contribute the licenses for a wide range of ARVs, and the MPP would then sub-license to generic manufacturers the right to make and market them in return for modest royalties to the patent holder. Competition among generic companies, with their low manufacturing costs, would be expected to keep prices down.
Results for Development Institute has spent the past year studying the MPP and another patent pool (the Pool for Open Innovation, recently rechristened as WIPO-ReSearch) set up to promote the development of drugs for more than a dozen neglected tropical diseases like visceral leishmaniasis, a major parasitic disease spread to humans by biting insects in Asia and Africa.
Our study found that since ARVs have lucrative markets in rich countries and developers of these drugs therefore have a strong incentive to defend their patents, IP can be a real barrier to competition and affordable prices. Without special efforts to overcome these barriers, the prices for new AIDS drugs will remain high.
The key to a successful MPP is persuading a critical mass of drug companies to join. More life-saving new drugs would move faster from being expensive patented products to cheaper generics, and the MPP could also license a bundle of patents for 3 or 4 drugs to generic firms to produce fixed dose combinations, which are easier for AIDS patients to take than the cocktail of pills they otherwise have to swallow every day.
The reaction to the MPP from industry so far has been lukewarm. Only one multinational, Gilead, has entered the pool. Several others, including Johnson and Johnson, have said they will not join the MPP, or appear unlikely to be willing to do so. Still others like Bristol Myers Squibb and Novartis have been in protracted discussions with MPP officials.
The less desirable alternative to the MPP would be something like the status quo, in which some but not all companies agree on their own to license the IP for their ARVs to hand-picked generic firms under direct bilateral agreements -- known as voluntary licenses.
Gilead, GSK, and Merck have already issued such voluntary licenses, mainly to generic firms in India and South Africa. These licenses can also foster generic competition and include low or no royalty fees, but they are less open and transparent than the licenses that the MPP is proposing to issue, and may result in less competition than under the MPP. The voluntary licenses may also be more geographically restrictive than those issued by the MPP, naming fewer low and middle income countries where the generic companies are allowed to sell their drugs.
Additionally, with voluntary licensing, it may be more time-consuming and costly for generic companies to assemble all the IP they need to make the fixed dose combinations.
As of today, the history of the MPP is still being written. It will be important to see over the coming year whether this patent pool will become large enough to effectively accelerate the production of low-cost generic versions of new AIDS drugs and the creation of the fixed-dose combination. Millions of patients in countries around the world will be affected by what happens.
We would urge more companies to join the MPP. We think the patent pool can be good for everyone involved -- AIDS patients, poor country governments, AIDS donor organizations, and drug companies.
The MPP is an innovative idea that has merit on paper. Whether it actually works or not in practice, only a practical test can show. We would like to see this real life experiment take place.
David de Ferranti is President of Results for Development Institute. The co-author of this blog, Robert Hecht, is Managing Director at Results for Development Institute.