10 December, 2009

To,
The UNITAID Board Chair
Dr Philippe Douste-Blazy
Special Adviser on Innovative Financing for Development
UN Under-Secretary- General

We understand that the UNITAID's Executive Board is to meet on 14-15th December to finalise the Patent Pool implementation plan.

We are writing to you on behalf of the Peoples Health Movement, the largest global network of Civil Society Organisations working on health and access to health care, with a presence in over 80 countries across the globe. We wish to present to you some concerns regarding the Implementation Plan for the UNITAID Patent Pool.

The PHM appreciates the initiative by UNITAID to secure better access to essential medicines. We understand that a Patent Pool is one of many initiatives that are being discussed in various fora to enhance access, especially since the conclusion of discussions at the Intergovernmental Working Group on Innovation, Intellectual Property Rights and Access.

The IGWG was an important step forward in harnessing diverse energies to address, for the first time, issues of R&D and access in a comprehensive manner. We believe that, in order to build upon the foundation laid in the discussions at the IGWG, different initiatives need to emerge which would complement each other. We see the Patent Pool initiative as one among many such potential initiatives.

While the Implementation Plan that is to be discussed at the UNITAID Board meeting was not made public, friends and colleagues who have felt that PHM may indeed have some valuable insight to offer on the Implementation Plan have been kind enough to provide us with details on the contours of the Plan. These have since been confirmed by reports that have been circulating in the past one week. We base our observations and concerns on these reports.

Developing countries - market segmentation
We understand that there is a proposal to segment the markets of developing countries (that are classified as low and middle income countries) through the Patent Pool Implementation Plan, whereby pharmaceutical companies would be able to choose the countries in which the Patent Pool would be made operational and/or negotiate the terms and conditions for the inclusion of all these countries in the Pool. This is perhaps based on the premise that the Pool would target countries that are seen to require the largest levels of support to secure access. However, such segmentation is fraught with several problems.

First, it must also be remembered that when one speaks of so-called middle-income countries, the discussion is not just about China or Brazil but about 101 countries across all regions of the world.

The situation as regards access is extremely precarious in many of the so called "emerging economies" such as India, China, Brazil, and South Africa. Neoliberal policies, that inform the trajectory of many of these emerging economies, have also increased inequities that are not apparent when one looks at gross data regarding economic performance. Thus, while India is categorized as a middle-income country, more than third of the population lives on less than a dollar a day!

Second, domestic manufacturing and R&D capacities, are uneven between low and middle income countries. For several of the developing countries in question, local manufacturing is the foundation of medicines supply to their public health systems. The history of voluntary licencing has shown that it is in fact these countries that multinational pharmaceutical companies prefer to exclude from licences. In some of these countries, generic supply is only possible through local manufacture. Further, if some important countries that have such capacity are not included in the pool, there may not be enough generic manufacturers who would be able to make use of the Patent Pool and supply to countries that do not have capacity to manufacture. The public health impact of the Patent Pool in terms of local manufacturing is an issue that has simply not been properly examined or discussed.

Third, this might open the way for insistence by Pharmaceutical companies to put in place onerous mechanisms to prevent "leakage" into markets not covered by the Pool. We have already had one very negative experience with such a mechanism in the case of implementation of para 6 of the Doha Declaration. We trust that no such mechanisms, which create greater barriers to access and result in price increases -- again to be borne by patients -- are being contemplated by the Pool.

On balance, allowing pharmaceutical companies to "Cherry pick" has the potential of being in the interest of Big Pharma, to the exclusion of other stakeholders. Big Pharma would lose very little in terms of existing markets, would be secure in the knowledge that the global IP system is only being strengthened, will reap enormous benefits from an accelerated Public Relations drive that deflects attention from their continuing activities that severely compromise access, and even secure finances in the form of royalties from public health budgets of developing countries. It should be clear in any discussion on royalties that this is ultimately what patients or governments will pay; not generic manufacturers who take licences from the Pool.

We note that the UNITAID Board Chairperson has made a public statement to the effect that the aim of the Patent Pool is to include all low and middle-income countries. Our concern is on the details of how this will be achieved.

It appears from the proposal on the implementation of the Patent Pool, that patent owners would be allowed the opportunity of additional negotiation and additional incentives to include all developing countries. The nature and form of these additional incentives and conditions must be the subject matter of proper public scrutiny.

First, any discussion on "additional royalty" is ultimately a discussion on how much more patients, directly or indirectly through their governments, will have to pay for treatment. We have already noted above that the dichotomy between low and middle income countries presented by the World Bank is misleading at best. To use this standard to determine who pays more money for critical medicines would be a grave mistake.

Second, other than royalty, additional incentives in our opinion can only mean seeking the intervention and/or support of developing country governments. Would this mean that developing country governments would then be responsible for taking steps to get their countries included in the Patent pool? What would the impact of such a scenario be on the kind of international pressure that is brought to bear on a country considering compulsory licensing?

Third, there is no indication whatsoever of the parameters of these additional negotiations. Will they be time-bound? Will they be transparent?

Thus, we believe that it is insufficient for the Patent Pool to start with a position that aims to cover all so-called low and middle-income countries. Any public health oriented patent pool, must on principle guarantee inclusion of absolutely all developing countries in the negotiations for a license from the very beginning. The offer of increased royalty must be calculated with great caution and awareness of the limitations of World Bank classifications.

Legitimizing evergreening
We also wish to advise caution in proceeding with the implementation plan, as regards how it treats evergreening - the well known method of pharmaceutical companies to extend patent monopolies by making small or minor improvements to existing medicines. The Patent pool must be careful not to confuse the need to better adapt medicines first produced in developed countries to the needs of developing countries with whether the methods or formulations as a result of such improvements should be patented or not.

It has been established, albeit gradually, that such processes and the improved formulations that emerge from them are unlikely to, and indeed should not meet the patentability criteria in any country. Some countries, such as India and the Philippines, have made this clear through legislation. Others are improving their patent examination standards to ensure that such attempts to create multiple monopolies on a medicine do not succeed. It is not clear whether through the Patent Pool mechanisms such activities will be seen as patentable and thereby come in conflict with domestic patent legislations in some countries.

In fact, there is a clear need for a proper assessment of the impact of the Patent Pool in terms of reinforcing or unintentionally promoting evergreening patents or patents on obvious or known processes and products.

In this regard, grant-back provisions for generic producers to contribute improvements back to the Pool need to be evaluated. Thus, one would have to ask, if this is a patent pool or technology pool? If generic producers will be entitled to royalty from their grant-backs, would this lead to an increase in such kind of patenting by generic producers? Would the prospect of royalties also encourage Big Pharma to continue to pursue such patent applications throughout the developing world even though the harmful impact they have not only on access but also on research has been well noted.

Compulsory licensing
We appreciate the recent statement on behalf of the UNITAID Board that the Patent pool will not conflict with the use of TRIPS flexibilities, such as compulsory licensing. However, the very notion of segmentation of middle and low income countries shifts the balance of power in favour of pharmaceutical companies. They could be in a position to shun countries that are seen to be proactive in using TRIPS flexibilities or negotiate more onerous conditions for their inclusion in the Pool. This has the potential to set the Patent Pool initiative in direct conflict with TRIPS flexibilities.

Without sufficient safeguards in the Pool Implementation Plan on all these matters, we fear it will in fact be no better than the existing so-called "access" programmes of patent owners.

Governance of the Pool
We are also not clear regarding governance and decision making structures of the Pool and the location of such structures. By all indications it appears that the choice of location and legal scrutiny is pegged in the United States. Needless to say, such a location presents very little credibility for patients and civil society in developing countries. In terms of governance, the UNITAID Board would do well to remember that decisions on licence terms and conditions are ultimately decisions on which patients and governments get access to medicines and which ones don't; for those that do, further decisions on royalty and other conditions that can turn out to be too onerous to comply with are again decisions that directly impact patients lives. These decisions must accordingly be subject to the highest level of scrutiny and approval. It is crucial, that these issues be decided in a manner that does not compromise the balance of power and place inordinate power to preside over the lives of millions of people in the hands of Big Pharma and its supporters among country governments.

We also understand that the Patent pool, at present, is conceived for antiretroviral medicines. We appreciate the fact that constructing a Patent Pool is a complex mechanism and separate efforts may be necessary to develop such Pools in other therapeutic categories. However, this is a necessary goal to be pursued, and must be included in any road map of an implementation plan for Patent Pool(s).

The Peoples Health Movement would urge you to consider the proposition that the Patent Pool mechanism would ultimately be weighed on the consideration whether it strengthens or disarms the global struggle to secure sustainable, equitable and inclusive access to health products. Given the strategic role that the Pool can play, it is imperative that all stakeholders, including Civil Society Organisations and patients groups in Asia and Latin America, be consulted adequately before a Final Plan is adopted.

The Peoples Health Movement urges on the UNITAID Board to consider the concerns raised. We are confident that we both stand on the same side, as regards the felt need to reverse the present power relations that IPRs ensure. We hope that the UNITAID Board shall respond to these concerns.

Your Sincerely,

Bridget Lloyd (PHM Global Co-ordinator)
Amit Sengupta
On Behalf of the PHM Steering Committee