Patents must serve the public interest

This is the second and concluding part of Marcus Low’s article on how pharmaceutical patents are blocking access to essential medicines. Read part one.

As in other developing countries, South Africa should stop granting patent monopolies for every reformulation or new use of an existing medicine. This process, called ‘ever-greening’, is a tactic used by the pharmaceutical industry to continually extend their patent protection by making minor changes to existing drugs.

On top of high prices, it actually reduces the incentive to develop truly new medicines by offering hard-to-resist income streams for less risky, but also less innovative, investment in ‘ever-greening’.

Apart from setting the bar for patenting a medicine higher, the new policy seeks to make it easier to override patents (through compulsory licensing) where the public interest demands it.

Of course some will argue that if legal mechanisms can override a patent, it will undermine the incentive for companies to invest in researching new medicines.

Had pharmaceutical companies spent say 50% of sales on researching the kind of medicines the world needs, then this argument may have been compelling. In reality, major multinationals spent on average less than 8% of sales on research and development in 2010 – and much of that was on making reformulations or on churning out yet more variations on existing hypertension or cholesterol drugs. If patents are to serve the public interest, we must make it less enticing for companies to waste billions on developing me-too drugs, marketing them, and litigating and lobbying to maintain the regulatory status quo.

The recent Novartis case in India is telling. According to Knowledge Ecology International (KEI), Novartis invested between US $38m and $96m developing their cancer drug Gleevec but a much greater investment was in fact made with US public research funds. Gleevec is a new formulation of an existing cancer medicine and the patent was therefore rejected in India. Novartis unsuccessfully fought this battle all the way up to the Indian Supreme Court demanding that they deserved a patent to recover their R&D costs – this while making US$4.6billion from Gleevec in 2012 alone, recovering their entire investment every 13 days.

While there are cancer patients who can’t afford the drug, such profiteering can not possibly be in the public interest.

Furthermore, commonly made threats that more progressive patent regimes will lead to disinvestment are merely a cover for the underlying greed to maximise profits. Despite India’s progressive patent laws according to The Economic Times, India realised US$1 billion of foreign direct investment from April to June 2013.

In contrast, South Africa’s experience has been largely opposite. Since adopting US style patent laws in the late 1990s, some 37 pharmaceutical plants owned by foreign multinationals have shut down, choosing to move operations to regions with cheaper labour and production costs.

At the time of the landmark Gleevec decision, Novartis still had 146 patents in India. So even in the most progressive legal framework the vast majority of patents are upheld.

Whatever the victim rhetoric from big pharma, the truth is that the United States, Europe, and the pharmaceutical companies that they represent won the war over patents when the TRIPs Agreement was signed, locking all WTO members into granting 20 years of patent protection.

What India, Brazil (with its current reform bill) and others have achieved is to bring some nuance and sensitivity to the blunt and indiscriminate instrument that the rich world wants intellectual property to be. Our Constitution demands we follow their example.

Marcus Low is the editor of the Treatment Action Campaign’s magazine, Equal Treatment. You can follow him on Twitter @marcuslowx.