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WORLD AIDS DAY: Profits Delay Cheap Canadian Drugs

Paul Weinberg

TORONTO, Nov 24 2004 (IPS) - The highly touted Canadian plan to export cheap medicines to poor developing countries fighting HIV/AIDS and other health emergencies, hailed by Prime Minister Paul Martin in his June re-election campaign as a bold achievement, is in trouble over profits for participating drug makers.

And a United Nations envoy, along with non-governmental organisations (NGOs) that represent front-line health care workers in areas like sub-Saharan Africa combating the spread of HIV/AIDS, malaria and other serious aliments, are calling upon Martin’s government to push harder to get the export plan underway.

“The officials have been proceeding not with as much haste as we might have liked, now that the heat has died done, and we are not paying enough attention to how it operates on the ground,” Richard Elliott, director of legal research and policy for the Canadian HIV/AIDS Legal Network, told IPS.

At the centre of the proposal is new Canadian legislation that permits makers of generic or copycat drugs to produce cheap versions of brand-name medicines to treat developing countries’ health emergencies without having to compensate the multinational firms that hold patents on those drugs.

A second NGO, Médecins sans frontières (Doctors Without Borders) has proposed a list of medicines for a range of serious ailments, including HIV/AIDS, which it would like to see generic companies produce.

But Canada’s generic drug manufacturers have not responded to the MSF request.

Jeff Connell, spokesman for the Canadian Generic Pharmaceutical Association, told IPS the regulations proposed under the export plan do not offer enough financial incentives for his members to participate.

Generic firms might have to spend three to five years developing a version of a patented drug, but under the rules they are only given, at the most, four years to sell it to the countries in need, according to Connell, inadequate time to earn a fair return. “It is our member companies that actually have to produce these products, products they don’t even make right now,” he added.

“Obviously, the process has been very disappointing, and it is very difficult to figure out where the problem lies,” says Stephen Lewis, the Canadian who is United Nations Special Envoy for HIV/AIDS in Africa.

United Nations World AIDS Day is Dec. 1.

Canada is the first country to establish a legal regime that governs the making and selling of cheaper versions of expensive patented medicines for health emergencies.

It follows a 2003 World Trade Organisation (WTO) agreement to allow the bypassing of patents held by multinational drug companies, which have kept prices for many medicines out of reach for impoverished nations that are unable to make the products themselves.

The Jean Chrétien Pledge to Africa Act (named after the former Canadian prime minister who proposed the plan), which is slated to become law in January 2005, “is not as perfect as it could be,” said Lewis in an interview with IPS.

Nonetheless, he added, “it is still legislation which could yield a very significant flow of anti-retroviral drugs (used to treat people living with HIV/AIDS) if all of the actors get involved.”

Adding to the urgency of providing the Canadian exports is the fact that India – a major source of affordable generic drugs for developing countries – will in the long-term be less of a key supplier because it is obligated under WTO rules to implement pharmaceutical patent laws starting in 2005, added Lewis.

But a Canadian official says it is up to the generic drug makers and NGOs in Canada to sort out how to make the export plan and its regulations work. “Ultimately, this is a private sector initiative. This is what the legislation was intended to do,” Doug Clark, senior project leader in the patient policy directorate in Industry Canada, told IPS.

Lewis objects to what he describes as the Canadian government’s passivity towards its own initiative. “I would have thought that the minister of trade or the minister of health would be moving on this and giving really strong and internal public leadership on getting the generic (makers) to make applications (to the government for permission to make copies of new patented medicines).”

“The government should be out there with African countries soliciting their bids and encouraging them to make direct applications,” Lewis added. That kind of momentum would in turn encourage the generic drug manufacturers to respond, he suggested.

The U.N. envoy is also not convinced that generic firms in Canada will lose money from the export plan – although he acknowledges they might have to adjust their manufacturing process and expand industrial capacity to meet the demand for cheaper medicines.

“Everybody is apprehensive; everybody isn’t sure how things will work or whether they can work. Somebody has to have the courage to test it; governments have to encourage that test, and the generics have to be willing to undertake it,” urged Lewis.

But Connell says the Canadian legislation also leaves his members open to lawsuits by the patent holders in the pharmaceutical industry.

For instance, Ottawa “wants our companies to police the product from the time it leaves our factories to the time it goes into the patients’ mouths,” Connell told IPS. “(We) don’t have the staff or whatever to send to Africa to make sure that none of this product is diverted (for other commercial purposes).”

One expert agrees that insufficient incentives for generic drug makers are making the Canadian plan unworkable. Nevertheless, Joel Lexchin, an emergency physician, author and associate professor in the York University School of Health Policy and Management is not completely pessimistic.

“The main value in the end for this Canadian legislation may not be that the Canadian generic companies get to export the product. The main value may be that that legislation serves as an example for other countries to take it and improve upon it,” Lexchin told IPS from Toronto.

Both Norway and the European Union have shown interest in developing similar export plans. The latter’s proposal contains some flaws, states MSF in a press release. “We regret (for instance) that the proposal requires prior negotiations with the patent holder, which will inevitably delay the swift use of the mechanism.”

How long it might take post-2005 for the current supply of generic drugs from India to dry up depends on how many new important brand-name drugs are introduced by multinational pharmaceutical companies in the next few years, says Lexchin.

“Drugs marketed before 2005 will still be available generically from Indian companies. If there are few important new drugs developed and marketed after the end of this year then there won’t be much of a problem. Generally speaking, there are not many important new drugs introduced in any given year.”

“But even a few can make a significant difference in diseases like multi-drug resistant TB (tuberculosis) and HIV,” he added.