The high prices of patented medicines: The case of Hepatitis C
By Germán Velásquez
Health systems in many developing countries are experiencing growth in health spending, beyond the financial capacities of their economies. Medicines expenditure is the category that most grows as a result of increasingly higher prices of new products.
Medicines have reached unsustainable price levels, which is due in large part to the rules of protection of intellectual property required by the World Trade Organization and free trade agreements. The widespread use of patents for medicines, for a period of 20 years, is creating problems not only in developing countries but also in developed countries.
The case of Hepatitis C is a warning sign of what is happening and may happen in the future. Hepatitis C, which the World Health Organization estimates infect 150 million people worldwide, has been treated until now with pegylated Interferon, an expensive drug, which is difficult to use and has serious side effects. The new oral drugs, Sofosbuvir and Simeprevir, known as direct-acting antivirals (DAAs), which are newcomers to the market in the last year, could revolutionize the treatment of Hepatitis C. Studies show cure rates of over 90% for some disease genotypes (four of the six known). Unfortunately treatment prices are exorbitant. In the United States a standard 12-week treatment costs US $ 84,000 equivalent to US $ 1,000 per pill. Experts from the University of Liverpool estimate that the cost of production moves in a range between US $ 68-136 per treatment.
The striking difference in price is often justified with the argument that the development of novel drugs is expensive. However, in this case, the product was developed by a small company that was acquired by Gilead, the North American company that has a patent on the product. It argues that a liver transplant, which many patients could possibly need, costs about US $ 100,000. That is why it sets the price of the new medicines so high.
On 13 January 2015 the Patent Office Controller of India rejected the patent application by Gilead company for a key drug against Hepatitis C. This is being hailed by advocates as a path to dramatically lower costs of treatment for the disease.
The decision states that oppositions to several patent applications on Sofosbuvir were filed by the Initiative for Medicines, Access & Knowledge (I-MAK) and the Delhi Network of Positive People (DNP+) in November 2013 and March 2014, arguing that they were not sufficiently novel and inventive as required for a patent.
According to Médecins Sans Frontières (MSF, Doctors without Borders), “Gilead has signed voluntary licence agreements with multiple generic producers in India, but these agreements impose many restrictions, including which countries can access the drugs produced under these licences, as well as invasive restrictions on medical providers and patients with respect to distribution and use of the drug,” said MSF. “With the patent being denied, other companies that have not signed the licence are now free to produce.”
Indian manufacturers could produce this drug in the future for as little as $101 for the full three month treatment course. That’s roughly $1 per pill, which is a big improvement over the $1,000 per pill Gilead is charging in some countries. At the current prices, Sofosbuvir is unaffordable for widespread use in most countries of the world.
Countries like Spain and France have managed to negotiate the price with the manufacturer, to 25,000 and 42,000 Euros respectively, per treatment. In view of the number of potential patients in these countries, the cost of the treatment may seriously threaten the financial viability of their social security systems.
Developing countries have made progress towards the goal of coordinating regional drug policies and to join efforts to negotiate prices, in some regions. These gains would be undermined if the problem caused by the high prices of medicines under patents is not resolved. Negotiating and achieving affordable prices for drugs, today and in this case, is an ethical imperative.
And if the negotiations would not result in reduction of prices, countries should consider implementing legitimate mechanisms recognized by the WTO such as compulsory licensing mechanisms. Or countries should analyze the legal possibilities to refuse the patent, as India has done. The right to health cannot be subject to the rules of international trade.
Germán Velásquez is the Special Advisor on Health and Development of the South Centre.
