Facilitating Access to Affordable Medication

Panel Discussion sponsored by the Asia Society and Oxfam International
New York City, April 24, 2007

Keynote Speech:
Mary Robinson, former President of Ireland (1990-1997) and President of Realizing Rights: The Ethical Globalization Initiative

Moderator and Chair:
Dan Rosan, Director for Public Health at the Interfaith Center for Corporate Responsibility

Panelists:
Elizabeth McGeveran, Vice President, Governance and Sustainable Investment, F&C Asset Management;
Dilip G. Shah, Secretary-General, Indian Pharmaceutical Alliance;
Jeffrey Sturchio, Vice President, Corporate Responsibility at Merck & Co., Inc.;
Jon Ungphakorn, Executive Secretary of the AIDS Access Foundation and former member of the Thai Senate.

On April 24, 2007 the Asia Society hosted a panel discussion with Oxfam International: "Facilitating Access to Affordable Medicine," which discussed the key to a sustainable pharmaceutical business model in developing countries. The issue of access to affordable medicine unifies a range of stakeholders from different professional fields such as generic pharmaceutical manufacturers, research and development (R&D) pharmaceutical companies, government officials, the investment community, and civil society. Access to medicine is an issue that resonates with the institutional mission of Asia Society because it directly affects the partnerships and relationships between Asian and U.S. counterparts.

To date, the relationship between R&D pharmaceutical companies and the generic pharmaceutical industry has been fraught with contention and many people in developing countries still lack suitable access to essential medications. Access to medicine has become an East-West issue because a majority of the R&D pharmaceutical market is in the U.S. and many generic manufacturers and developing economies are in Asia. Increased globalization and outsourcing in the private sector has unified the U.S. and Asia, and as the impact of public health emergencies intensifies, there is a greater importance to stabilized public health in Asia. All stakeholders should be concerned about ensuring access to healthcare, including essential medicines. This was reinforced during the discussion, which focused on a range of issues including human rights, investment risk, business competitiveness, international law, and research and development in pharmaceuticals.

Human rights is an important component in the debate of access to medicine. In her keynote speech, Mary Robinson stressed the relationship between realizing fundamental human rights and access to healthcare: "The human rights framework provides international standards, voluntary standards that governments have accepted, but once accepted they become binding. They are legal standards against which government performance can be measured over time." Mrs. Robinson sees an urgency to view public health in a similar legal framework as human rights, believing that governments should work harder to set an international minimum standard to provide health care for citizens. Around 30,000 children under 5 die every day from preventable disease. The cost of medicine represents the greatest share of health care expenditure in poor countries. From a human rights perspective, access to affordable medicine is deplorable. Increased accessibility to essential medicine can buttress an international standard of healthcare in developing nations. President Robinson urged the public and private sector to share responsibility: "Implementing the right to the highest attainable standard of health should be the ultimate goal of any actions in the field of global public health."

Investment Risk

Elizabeth McGeveren works at an investment management company, which offers an interesting perspective as a stakeholder, bridging the advocacy work of civil society and the investment community's concern with public health. F&C Asset Management is unique because they have a team that investigates corporate governance of companies in F&C's investment portfolio. This team also examines social and environmental risks associated with their investment portfolio. "We want evidence... that they [companies] are managing the risk actively and they're managing the risk throughout the entire corporation, not just to their corporate social responsibility or philanthropic problem, but it's part of the core business approach to managing the company," states McGeveran during Asia Society's panel discussion. McGeveren contends that public health is a quantifiable and legitimate risk for investors to recognize. For example, HIV/AIDS has a financial impact on investment opportunities in countries like India and China, and ensuring sustainable access to pharmaceuticals is an integral part of managing that specific investment risk. Access to medicine helps to sustain a healthy workforce, which is a growing concern for investors in emerging markets. With greater investment in developing countries comes a burgeoning generic pharmaceutical industry. The debate now expands beyond HIV/AIDS and permeates a wider range of issues associated with economic development.

Business Competitiveness

Generic pharmaceutical manufacturers are major stakeholders in the debate. Most of the generic pharmaceutical industry is in Asia, and they provide affordable medication to a global population. In 2006, the Guardian reported that India provides two thirds of global antiretroviral therapy; Indian companies were able to cut costs of antiretroviral treatment from $15,000 per a patient per a year to $200 per patient per a year. This not only resonates with the argument made by civil society, but it also presents a substantial business opportunity for stakeholders such as Dilip G. Shah, who represents the generic pharmaceutical industry and its mission to provide an innovative business solution to the problem of inaccessible high-priced medication in developing countries. Pharmaceutical companies in India have mastered the process of reverse engineering to manufacture generic alternatives to a wide range of patented medications, and there is a high demand for these cheaper drugs in developing countries. Access to medicine is not just an HIV/AIDS issue: Thailand issued a compulsory license for the heart disease and stroke medication Plavix, demonstrating that priorities for providing affordable medicine are moving beyond just HIV/AIDS.

International Law

The issue of Trade Related Aspects of Intellectual Property Rights (TRIPS) was brought up a number of times. TRIPS sets a minimum international standard for the use of intellectual property such as patent pharmaceuticals. All World Trade Organization (WTO) member states are obligated to abide by these standards. Compulsory licensing is a flexibility of TRIPS and one of numerous public safeguards that permits countries to manufacture generic alternatives of patented pharmaceuticals to increase accessibility to affordable medicine. There are multiple grounds for which countries can issue compulsory licenses to make generic versions of patented drugs: to pacify national health crises, resolve anti-competitive behavior, placate emergencies, etc. These are all highly general grounds, but most importantly, the WTO Doha Declaration of TRIPS affirms that each country is permitted to set their own preferences to determine on what public health grounds they seek to issue a compulsory license and sell medicine non-commercially at affordable prices. John Ungphakorn defended Thailand's right to compulsory licensing as justified because it is only for government non-commercial use. Thailand is trying to sustain its universal healthcare system, and compulsory licensing is a means for Thailand to provide affordable medicine to its citizens. He believes that drug companies have failed to reduce the price of antiretroviral medicines to an affordable price for Thai citizens. Over 580,000 people live with HIV/AIDS in Thailand, and Thailand national drug program treats 82,000 HIV-positive people. Thailand is fast becoming one of the largest producers and distributors of generic alternatives for high-priced medication under its national healthcare program.

Research and Development Pharmaceutical Company Stakeholders

R&D Pharmaceutical companies are critical of countries that break patent laws because they claim that it negatively affects investment in research and development. Recently Abbott made a threat that it would not introduce new medicines in Thailand because of Thailand's decision to issue compulsory licenses for one of Abbott's second line HIV/AIDS medicines. Jeffery Sturchio from Merck & Co. asserts that failing to successfully negotiate with pharmaceutical patent holders to increase accessibility of affordable medicine can compromise the public health of the developing world. Brazilian President Luiz Inacio Lula da Silva issued a compulsory license to produce a generic version of Efavirenz, an antiretroviral drug patented by Merck &l; Co. In a Kaiser Daily HIV/AIDS report, Dr. Sturchio said that if Brazil "expropriates our intellectual property, it will have a chilling effect on whether companies research diseases of developing world and in the long term will have an impact on the poorest countries." Even if vaccines are made available at affordable prices, it is not a solution to strengthening health systems and finding trained healthcare professionals to deliver care. Dr. Sturchio defends Merck's policy stating that it has increased the number of people benefiting from Merck's medicines in Africa from 1,000 to 400,000. Dr. Sturchio also made clear that he was speaking for Merck & Co. Inc. and not the pharmaceutical industry as a whole. Dr. Sturchio stressed the importance of looking at increased public and private sector partnerships to share the responsibility of increasing access to medicine. All of Asia (except Japan) and all of Africa comprise only 5.1 percent of the global pharmaceutical market, according to Information Management Group. The R&D pharmaceutical industry is worried that granting compulsory licenses will set an unwanted precedent for other countries to follow. R&D pharmaceutical companies argue that the opportunity cost of breaching the patent system is large and would decrease R&D investment and the discovery of new drugs.

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