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CANADA: Activists Claim Partial Victory on Export of Generic Drugs

Saul Chernos

TORONTO, May 5 2004 (IPS) - Canada is on the verge of passing a law that would allow makers of genetic medicines to produce and export relatively inexpensive versions of patented, brand name products to developing countries trying to tackle serious epidemics.

Canada is on the verge of passing a law that would allow makers of genetic medicines to produce and export relatively inexpensive versions of patented, brand name products to developing countries trying to tackle serious epidemics.

On Tuesday, Parliament approved legislation formally introduced last November after then-Prime Minister Jean Chretien pledged to legalise the export of generic copies to countries that could otherwise not afford costly brand-name drugs to fight HIV/AIDS, malaria, tuberculosis and other diseases.

The proposed law, which is scheduled for debate and possible ratification Thursday in the Senate, Canada’s upper chamber, has drawn mixed reviews.

Stephen Lewis, the United Nations envoy for HIV/AIDS in Africa, told IPS the removal of a highly controversial right-of-first-refusal provision is a significant victory for non-governmental organisations (NGOs) and people in developing countries who cannot afford costly patented medicines.

The clause would have given brand-name manufacturers the first right to fill shipment deals arranged by generic firms, leading generic drug makers and humanitarian groups to warn it could lead to brand-name firms blocking exports of generics, potentially pricing medicines out of reach of the people who most need them.

“I’ve come tentatively to the conclusion that the government has by and large honoured the position it took last September, when it announced the legislation,” Lewis said. He added that time will tell if other amendments to Bill C-9 will unduly restrict the participation of some countries or limit the approved list of medicines.

Richard Elliott, research director with the Canadian HIV/AIDS Legal Network in Toronto, said he applauds the deletion of the right-of-first-refusal. “That was a huge sticking point, and one of our most fundamental criticisms of the bill.”

However, the government added a “non-commercial” amendment to the bill that would give patent holders the right to sue generic companies that sell a particular drug for more than 25 percent of the Canadian list price. Elliott said this could potentially increase the leverage of brand-name drug companies.

Generic firms would have loopholes. They could argue, for instance, that the price they are charging is in line with their manufacturing costs, plus 15 percent. But, said Elliott, the amendment gives brand-name firms in an already litigious industry yet another reason to go to court – in this case to cancel a generic producer’s licence to copy and export a particular patented drug.

“It may or may not be the case that 25 percent of the price is appropriate. But if it goes above 25 percent, then the litigation is invited,” Elliott said. He described the amendment as “part and parcel of a larger ‘big pharma’ agenda of pushing stronger intellectual property standards.”

Officials say the amendment is intended to ensure prices remain affordable.

“We recognise that the generics should be making some type of return in order to encourage their participation, and we think that 25 percent allows for that,” said Eric Dagenais, director of patent policy with Industry Canada, the government department that led the drafting of Bill C-9.

Twenty-five percent is not a fixed cap, he told IPS, but a figure that would ensure wider scrutiny if it was exceeded.

Brent St. Denis, the Liberal Party Member of Parliament who chairs the committee that reviewed Bill C-9, said the legislation represents a compromise. Brand-name companies “weren’t thrilled” with the removal of the right-of-first-refusal, and the non-commercial amendment addressed what they considered unfair competition, he explained in an interview.

“I think the government has found the right balance between making sure that the generics have the right to do this, and keeping a bit of a downward pressure on prices for the purposes of the bill, which is to get cheap drugs to the countries that need them.”

Also tacked onto the bill is an amendment giving non-members of the World Trade Organisation (WTO) such as Vietnam and East Timor, access to generic exports.

Elliott said he appreciates those nations are now included, but he called the wording problematic because countries receiving generic medicines through compulsory licensing would have to first declare a state of emergency and then make their case product-by-product.

“This doesn’t make sense from a public health perspective,” Elliott said, adding that it is unethical to wait for an actual emergency before making affordable medicines available.

By applying this measure only to non-WTO countries, Ottawa could be perceived as pressuring them to join the WTO, he added. “It’s contrary to Canada’s obligations under international human rights law, where there is a very clear direction that one should never use the issue of access to food or medication as a political bargaining chip.”

Elliott also objects to an amendment that would require NGOs to secure the permission of the government of a country where they are offering treatment in order to import generic medicines from Canada.

But Lewis said governments must be able to set policies and plans for any medical intervention happening within their borders. Some organisations, including Medecins Sans Frontieres (Doctors Without Borders), have a solid reputation and working relationship with governments and should easily be able to secure their support, he added.

“One of the very important safeguards is that we do these things in conjunction with the national plan of the country involved. To ask a government to approve an NGO bringing in anti-retroviral drugs and doing treatment is not a terrible thing to suggest, Lewis said.

The only apparent roadblock to Bill C-9 becoming law is a looming federal election. If a vote is announced May 9, as is currently anticipated, both Parliament and the Senate, which ratifies all federal legislation, would shut down and the next government would have to decide if it wants to complete any unfinished business or begin anew.

Chretien’s successor, Prime Minister Paul Martin, has said the legislation is a priority for his government, and with the Liberals leading in the polls, the bill seems likely to pass sooner or later. “In a worst-case scenario you’re only looking at losing a couple of months,” St. Denis said, adding that the bill has received broad support from all parties and would likely return to the table fairly quickly if interrupted by an election.

When the bill becomes law, Canada would become the first country to implement what is known as the WTO’s ‘Aug. 30 Decision’. It allows countries to override patents on pharmaceutical products so that generic companies can export to countries that lack their own drug-making capacity.

While much of the political lobbying appears to have ended as far as the legislation, in many respects the work has just begun. Elliott said he expects some of the same battles will be fought to ensure that regulations stemming from Bill C-9 offer the flexibility needed in order to serve their intended purpose.

“We’ll have to see if big pharma tries to derail things when those first applications for compulsory licences come forward,” he added.

Lewis said humanitarian groups will need to tell governments and other interested parties that Canadian generic firms are able to begin making and exporting competitively-priced medicines.

”We’re going to need the drugs for the next two generations,” he said. “Even if it takes a few months now, the drugs are going to be used year after year after year. Potentially there are hundreds of thousands, way into the future, millions, of people who will be treated.”