Drug Development for Dummies

http://drugwonks.com/2007/11/drug_development_for_dummies.html

DrugWonks
Drugwonks.com is the web log of the Center for Medicine in the Public Interest (CMPI), a forum offering rigorous and compelling research on the most critical issues affecting current drug policy.


Robert Goldberg
November 16, 2007
Jonathan Cohn, in an otherwise excellent and thoughtful piece in The New Republicv on how to shift health care systems to a value based reimbursement approach (from a single payer perspective) , resorts to the shibboleth that drug companies are not very innovative as if this is somehow their fault and by design. He relies on the totally useless work of Marcia Angell and Merrill Goozner, neither of whom know much about drug discovery and development and what they do write is selective and misleading.
First, if drug development and discovery were so easy it wouldn't be so expensive. Success rates have fallen not be design. Would any one want to invest $800 billion in a drug only to have it fail. But it happens all the the time. Incrementalism by the way is the norm of science and all things whereas the ability to use one medicine or insight to transform or extend life is rare indeed. Yet Cohn falls into the trap all amateurs fall into and believes that if drug or biotech companies tried a little harder they could nail it. That's arm chair quarterbacking at it's worst. If you think it's so easy to hit a Jaba Chamberlain splitter, why don't you try out for the Bosox and hit it not once every 1000 times but one out of three times. Hit .300 and you are in the Hall of Fame. My brother has worked for a drug company for 20 years and has 3 of the drugs he has worked on approved. That's a lot.
Now as to the heavy lifting. This notion that NIH discovers everything is just not true. The amount of collaboration is astounding and is what separates the US from other parts of the world. Angell and Goozner lie outright to avoid describing the partnerships that shape innovation in America and depict a Golden Age that never existed. Angell asserts that every breakthrough drug started without drug company involvement. She claims that Gleevec, the first cancer drug to target cancerous cells without side effects, was developed without any real input from Novartis, the company that makes the product. Angell says that Brian Druker, a cancer researcher at Oregon Health and Science University, said that Novartis showed little interest in the cancer compound until he discovered its tremendous properties. The real story--from the Journal of the National Cancer Institute--reflects the risky and collaborative nature of drug development, which requires massive capital and biopharmaceutical know-how to turn discoveries into effective treatments. An academic researcher and private company, working together, launched a revolution in the treatment of cancer. You wouldn't know it by reading Angell.
Goozner makes the same claim about drugs developed by Amgen. Everyone involved knows better.
Similarly both Goozner and Angell disdain the revolution in personalized medicine thereby ignoring genomic based science, something that Senator Obama has taken leadership on in the Senate along with Senator Richard Burr.
For instance, The Truth About the Drug Companies also claims there is no real evidence that any one drug is better than another or that most medicines really do much at all. And Angell goes as far as to say: "the idea that patients respond differently to me-too drugs is merely an untested and self-serving hypothesis." Rather, she says, "one or two drugs will do" for most medical conditions. And Goozner still can't figure out the difference between a surrogate end point like blood pressure and a genetic marker which both predicts and controls disease progression.
Cohn's article in the New Republic tries to argue that value based reimbursement can let people have the best of both worlds in a single payer system. I disagree. But he gets the point that health care is an investment and that innovation is valuable. I would recommend that he go beyond Goozner and Angell to understand the role the private sector plays in promoting innovation and just how difficult real invention is.
http://www.tnr.com/politics/story.html?id=53e206dd-c286-43b1-9c5b-079e81ab3474

Compulsory Hypocrisy

http://drugwonks.com/2007/11/compulsory_hypocrisy.html

DrugWonks
Drugwonks.com is the web log of the Center for Medicine in the Public Interest (CMPI), a forum offering rigorous and compelling research on the most critical issues affecting current drug policy.

Peter Pitts

November 16, 2007
The recent session of the WHO’s Intergovernmental Governmental Working Group (IGWG) ended without consensus. And that’s a good thing considering that many of the issues on the table would have resulted in a screeching halt to medical progress.
The IGWG discussions were completely void of innovators -- with pharmaceutical researchers relegated to the sidelines. In their place were activists who are unwilling (and seemingly unable) to engage in any discussion that does not begin and end with removing systems of intellectual property (IP) protection for medicines.
As with many of their ilk, these activists believe in freedom of speech – as long as what you say supports their position. Otherwise you’re a capitalist tool. Their grasp on the truth is, well, questionable.
Consider this statement from our comrades over at Médecins Sans Frontières:
“Patents are not a relevant factor in stimulating R&D and bringing new products to the market.”
Really? What about HIV/AIDS, one of the WHO’s “neglected diseases,” where all of antiretrovirals currently in existence were developed under patent protection.
If their grasp on the truth is questionable, their chutzpah is unlimited.
Consider a recent editorial the latest publication of The Lancet where officials of the Thai military junta attack comments offered by patient organizations and other groups to the open forum of the IGWG.
“The issue that attracted the most responses was intellectual property (IP), which was cited in 43 of 68 submissions. Although we were not surprised to see that 11 of 12 organisations directly affiliated with the pharmaceutical industry supported strong IP protection, it was surprising that 14 patient advocacy groups took a similar position, which in several cases was the only point raised in their submissions; three professional associations also took similar positions … We declare that we have no conflict of interest."
This last comment is made after they state that, "We strongly suggest that contributors to public hearings must disclose any conflicts of interest, as required of authors submitting papers to peer-reviewed journals."
The authors did not declare that the Thai Ministry of Health owns the Government Pharmaceutical Organization (GPO) -- and that the GPO stands to significantly benefit financially from a proposed IGWG agenda strongly supports compulsory licensing.
Well, what’s good for the goose is good for the gander. Transparency should cut both ways – even in Geneva.
Posted by Peter Pitts on November 16, 2007

Government Price-Fixing in Medicine: the Demanding Entitled Patient

Journal of American Physicians and Surgeons Volume 12 Number 3 Fall 2007
http://www.jpands.org/vol12no3/savage.pdf


By: James A. Savage, M.D.

"The State is the great fiction through which everyone seeks to live at the expense of everyone else…The State cannot satisfy one party without adding to the labor of the others."
–Frédéric Bastiat, 1848

“Governments fix prices when the political support of one group is deemed to be more important than the support of another. Politicians of both major political parties have confiscated the sweat of the collective brows of physicians to purchase the votes of our patients—assuring, in most cases, their pathetic perpetual incumbencies.

We have been devalued and standardized so that we are viewed as simply identical cogs in the machine—cogs easily replaced by others as interchangeable parts. To politicians' way of thinking, the medical care provided by one physician is neither better nor worse than that provided by another. The best glaucoma surgeon in the country is prohibited by law from charging one red cent more than someone fresh out of his residency who has done only five trabeculectomies.

Price fixing always, always, always leads to shortages. In this case, unfortunately, the patients will not be able to figure it out because it is not a shortage of medical care, but a shortage of excellent medical care. It will simply get to the point that the compensation barely exceeds what it costs to provide the best care. The best college seniors will go for law degrees or MBAs—anything but medicine.

One would hope that patients would have the good sense to appreciate this and recognize what a value physicians' fees are nowadays compared to those of accountants, plumbers, hairdressers, and—most of all—attorneys. Long experience with human nature has taught me otherwise. I am constantly reminded that irony is the supreme overriding force in the universe when entitled patients, while arrogantly ensconced in my examining room chair, demand, with perfectly straight faces, that I do even more for them than they and their hit-men in Congress have already throttled out of physicians. Several years ago a patient canceled his appointment, incensed that I had charged for an office visit 4 months following his glaucoma operation. My letter to him follows. (His name, of course, has been changed.)

February 25, 2000

Dear Mr. Rodham:

I was disappointed to hear you had canceled your May 18 appointment. I understand you have taken issue with my charging for your January 17 visit. After I explain the basis for my fees, you can decide whether you still think your charges were out of line. I accept Medicare “assignment”; therefore the maximum I am allowed to collect for any service to a Medicare patient (like you) is the “reasonable” fee set by the Federal Government. For your trabeculectomy operation, Medicare allowed $708.13. As is their custom, they paid 80 percent ($566.50). The remaining $141.63 was paid by your co-insurance, AARP. Medicare further stipulates that surgical fees are “global,” covering your operation and all related postoperative care for 3 months. Because your operation was on September 8, no charges were allowed until December 9. Remember, your surgery was for glaucoma, a chronic, potentially blinding disease, requiring examinations and treatment for the remainder of your life.

Your operation was a complex, multi-step, microsurgical procedure requiring no small amount of experience and skill. As you search for a less expensive ophthalmologist, be certain you
find one who knows where and how deeply to cut, and how tightly to pull knots in sutures finer than some human hairs. If you are interested in the many details of the steps in the operation you can consult the textbook chapters and related references I have authored on the subject. They appear on pages eight and nine of the enclosed copy ofmycurriculum vitae.

On January 17, your eye pressure was 9 (compared to 16, prior to surgery). However, you no longer needed Timoptic or Xalatan eye drops for pressure control. I called three local pharmacies. Their average retail for one year’s worth of these medications is $499.12 per eye, 70 percent of what I was paid for surgery and 3months of aftercare.

Expenses in ophthalmology offices usually vary from 50 to 60 percent, and are sometimes even higher. The government taxes the remainder. As a consequence, my “take home” pay from the $708.13 was approximately $200. Do you honestly feel that I was overpaid at $200 or that you were overcharged? Of course, you weren’t charged at all! Medicare and AARP paid the surgery bill.

Had I billed for a visit on December 17 instead of January 17, your 1999 deductible would have been in effect. I doubt you would have noticed the charge or said a word about it. This is the problem when the consumers of medical care demand the highest quality but have no idea of, or concern for, what it costs. Incidentally, Medicare reduced my $75 charge for the January 17 office visit to their “reasonable” charge of $44. After overhead and taxes, my “take home” for that examination was between $12 and $13.

This morning’s Wall Street Journal reported that the going rate for free-lance clowns—you heard me, clowns—is $50 per hour! Perhaps my most sensible career move after high school would have been to buy a red rubber nose, a pair of size 72 yellow wingtips, and a squirting flower, instead of 13½ more years of school.

Your vision measured 20/25 at your last visit. This is impressive, considering your age-related macular degeneration and severe glaucomatous visual field loss extending to the center of your visual field. I sincerely wish I could make your macula 16 years old again and that you didn’t have so much glaucoma damage. All I can do is control your eye pressure, and I
challenge anyone to say that I failed.

It cannot be found in Webster’s dictionary, but the real definition of “overpaid” is “anyone who makes more money than I do”! After years of dealing with patients, it would not surprise me to be accused of price gouging if I did surgeries in the comfort of patients’ living rooms and only charged what it costs for an oil change. Perhaps my perspective is influenced by what I have to pay lawyers, plumbers, mechanics, accountants, and my office staff. Unfortunately, the government ratchets down what I am allowed to collect for my services, but neglects to ratchet down my expenses as well!

Fees have been cut so low it costs nearly as much to provide good care as the law allows us to collect for it! I wonder where I will find an expert when I am your age and I get sick. I know where to find the smart college students who the medical experts. Instead of medical school and a career with the responsibility for unrealistic outcomes demanded by patients, they will pursue a field in which they can still make a good living and get as far away from the government as possible.

Many of us in practice would love to get out of medicine. Unfortunately we spent nearly our whole lives (70 percent, in my case) in school learning to do our work, such as a microsurgical
sight-saving operation that the government says is worth less than a plumber would confidently charge to install a commode.

Mr. Rodham, the most important thing of all is that you receive the care you need for your eyes. This can only come from an ophthalmologist in whom you have full confidence. If I had as little regard for the value of my physician’s talents as you apparently have for mine, I would have canceled the appointment too!

If I can help you in any way with your eyes, please do not hesitate to contact me.

Sincerely,
James A. Savage, M.D.

... Physicians emerge from training in their fourth decade, usually with substantial debt. Now that fees are capped at such a low level, usually with healthy doses of bureaucratic and other abuse, fewer and fewer capable and innovative candidates are willing to choose medicine as a career. Some would argue that once the system is rid of greedy doctors, we could finally have an army of Marcus Welbys, indifferent to compensation. This will not happen. Human nature does not cease to exist simply because politicians, knuckles white from wringing physicians’necks, wish it were so.

No infinite supply of humanitarians with 2400 SAT scores exists, eager for a career guaranteed to grind them into dust. The same intellectual strength that would make them the most capable
physicians will enable them to see what a trap medical practice has become and make them unwilling to choose medicine as a career. Applicants to medical schools will still be mostly straight-A students. However, the well-documented transformation of college grades from a Gaussian curve into a stalagmite-shaped aberration (stark confirmation of rampant grade inflation) is a topic far too large for this discussion.

Avoid getting sick. Those who will care for us in our dotage will not be of the same stuff as their progenitors, who built the best system of medical care, now dying, that ever existed. It breaks my heart to know that the day is coming when American medicine will no longer be the envy of the entire world. Where will the sick from the far reaches of the globe go to get the very best care when it no longer exists here?

KEI’s Anti-IP Activists Same as Environmental Activists Involved in 2001 Protests of World Bank and IMF

Published on Wednesday, August 29, 2001 by Agence France Presse
Protesters Lash IMF, World Bank
http://www.commondreams.org/headlines01/0828-04.htm

WASHINGTON - Activists planning mass protests against the IMF and World Bank next month accused the two institutions Tuesday of secretly plotting policies that hurt the poor.
They called for World Bank and IMF meetings to be opened up to the public, for developing countries' debt to be written off and for there to be an end both to belt-tightening conditions that harm impoverished people and investments that damage the environment.
"Most of the decisions happen behind a wall of secrecy. We are looking for an end to that," Liz Butler, an activist with the umbrella group Mobilization for Global Justice, told a news conference.
The International Monetary Fund and the World Bank announced this month they would truncate their next meeting from one week to just two days, September 29-30, to avoid violence.
The decision followed demonstrations at a Group of Eight summit in Genoa, Italy, last month in which one protester

Robert Weissman, Co-Director of Essential Action,

answers a question at a press conference held

by the Mobilization for Global Justice

group in Washington, D.C.,

August 28, 2001. The group is a coalition of

various protest organizations which plan

to continue their stance of opposing the

World Bank and the International Monetary Fund

during their scheduled September meetings in Washington. REUTERS/Win McNamee

was shot dead and hundreds were injured.
But at the news conference here, the activists refused to answer reporters' questions about eight days of action, including protests, planned for the September IMF-World Bank meetings.
Robert Weissman, co-director of Essential Action, said the protesters wanted to concentrate on the core issues rather than being deflected by questions about violence.
"We are going to ask for your cooperation on that; in fact, we are going to insist on it," he said, earning jeers from reporters.
Washington Police Chief Charles Ramsey said this month that he expected some 50,000 protesters to converge on the US capital for the meeting, and he promised to keep order.
Members of Mobilization for Global Justice said it was impossible to be sure of the exact numbers, although they expected tens of thousands of people to attend.
Speaking to AFP after the news conference, Butler sought to focus attention on the policies of the IMF and the World Bank: "We are seeing thousands if not millions of people die because of their policies," Butler said.
"The agents that are acting to protect the wall of secrecy that they are making their decisions behind is unfortunately the police on the streets, so that is where the violence is coming from," she added.
Asked whether there was ever an excuse for violence on either side, Butler replied: "We are not responsible for how people have felt about these concerns."
At the last IMF-World Bank meetings in April, she said, 1,200 people had been arrested with no subsequent convictions.
Third World debt campaigner Tim Atwater, the interim national coordinator for Jubilee USA Network, said poor countries were struggling to pay off their debt at the expense of the young.
"Children literally are paying the price of debt to the richest and most powerful institutions in the world -- the IMF, World Bank and G7," Atwater told the news conference.
Atwater, who is also a minister, said the poorest 23 countries being helped by the IMF and World Bank's debt reduction strategy had only had their debt cut by 27 percent on average.
Blaming the problem on a thirst for power, he urged World Bank President James Wolfensohn and IMF Managing Director Horst Koehler to concentrate on creating a community.
"We would challenge brothers Wolfensohn and Koehler and others to come together and have a discussion about how we can ... give up the authority addiction and come together to talk about restoration of community," Atwater said.
Copyright © 2001 AFP

WHO Mulls Patent Changes and Prizes for Needed Drugs [at Insistence of Anti-IP Extremists]

The Wall Street Journal Health Blog

November 6, 2007, 8:42 am

Posted by Avery Johnson

Cheaper medicines for the developing world are on the agenda this week at a World Health Organization’s powwow in Geneva. And the debate there over patents is likely to give drug makers agida.
It’s the second meeting of a WHO public health working group that’s trying to put together an action plan to present to the World Health Assembly in May. The main issue on the table is age-old: How to coax drug makers to spend precious research dollars on diseases that aren’t blockbuster material? Some are thinking outside the box, reports the Financial Times, with suggestions for pooling patents or awarding prizes to companies that develop drugs for neglected diseases.
Margaret Chan, the WHO’s director-general, welcomed the delegates with a delicate dance. Her speech praised innovation (score one for the drug makers) and highlighted the need for equitable health care (notch one for public health advocates). Some WHO draft proposals are calling for the usual fix of compulsory licenses and beefed-up support for generics makers.
A U.S. NGO called Knowledge Ecology International is pushing for the more radical approach. One idea is to combine drug makers’ IP in a pool and farm out the collective knowledge to third parties for drug development. Patent holders would still get some rewards, but generics companies could launch a copycat product sooner and more cheaply.
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Soros-Funded KEI Works to Establish Globally Governed (Socialized) Health Care, With Aid of Liberal U.S. Politicians

The Open Society Institute, a George Soros Foundation ‘civil society’ NGO, also advances a new paradigm of supranational global governance of health, much as it also supports the establishment of a new global paradigm of ‘open source methods’ in the ICT sectors. Both initiatives endeavor to reduce the importance of private property rights, including IPRs. “The Law and Health program seeks to advance public health priorities and open societies b y supporting civil society‘s capacity in law and health and promoting the practice and discipline of law and health… The Law and Health program is also addressing key issues at the intersection of law and health, such as the global governance of public health. This includes the overarching regulatory framework for public health like the Global Fund to Fight AIDS, Tuberculosis and Malaria and their Country Coordinating Mechanisms (CCMs). A key aim for OSI within these new global structures is to ensure the participation of civil society and to develop new legal models for governance, participation, and transparency.” [1]

The following example shows how the Socialist-leaning Soros Open Society Institute has worked to undermine intellectual property rights internationally.

“Shortly following the commencement...by the WIPO General Assembly...of the 2004 special session...to consider... proposed amendments to the WIPO Convention essentially call for each country's stage of development to determine the scope and degree of private intellectual property protections in that country..., a group of European socialist-minded open source advocates and civil society activists submitted their own WIPO proposal, otherwise known as the ‘Geneva Declaration on the Future of WIPO’ . [2] The declaration demanded that, “WIPO abandon its current culture of expanding monopoly privileges without regard to social cost and to instead strike a balance between the public domain and competition on the one hand and the realm of property rights on the other. [It] also expresse[d] strong support for the…Argentina and Brazil…Proposal.” [3] It focused on the perceived inequities surrounding access to innovations in, and the scientific and technical know-how underlying, medical, information, and other essential technologies. And, it called for WIPO to ensure universal access to all such knowledge, as a matter of both morality and international law. [4] Following the political success of the Geneva Declaration, other European activists have since submitted their own proposals equating these inequities with human rights violations, and calling for a reinterpretation of the WIPO Convention’s mandate, consistent with international human rights law.” [5] [6]

Ralph Nader and James Love-operated KEI and its affiliates (formerly CPTech) justifies its ‘universal access to knowledge (A2K) program as being consistent with human rights, which are somehow different from economic rights.[7] However, KEI and its band of merry activists ignore how human rights also include economic rights and that there is no legal hierarchy among human rights.[8]

Furthermore, Robert Weissman, a key officer from KEI affiliate Essential Action, described as a “a nonprofit advocacy organization that works on pharmaceutical access and other corporate accountability issues”, recently testified before the U.S. Congress decrying how U.S. life sciences companies are abusing their hard-earned patent rights because they were unwilling to sell the products derived from those patents to the public and to developing countries at or below cost.[9] Mr. Weissman is also “counsel to [another KEI affiliate] Essential Inventions, a separate nonprofit corporation that aims to promote the creation and distribution of essential inventions and other works that support public health and access to information”. This organization, in other words, seeks to convert private goods (i.e., privately owned patents, copyrights, trade secrets – proprietary knowledge) into public goods (a/k/a ‘universal access to knowledge – A2K’) without providing the IP rights holders with just compensation. Mr. Weissman intentionally distorts the distinction between basic R&D lab work and the much more costly and extensive clinical trial and commercialization stages which transform the laboratory knowledge into market-relevant products.[10] He does so in order justify KEI’s agenda of reforming what is perhaps the most significant U.S. legislative enactment in the past 25 years to promote the commercialization and licensing of government granted basic R&D into market relevant products – namely, the Bayh-Dole Act - which has placed the United States at the global forefront of patent development and innovation.[11] But he ignores how the cost and time committed to the commercialization process far exceeds the cost and time committed to the basic R&D, which in many cases is rather fundamental and of not much relative use or value. KEI and its affiliates has also worked with left-leaning academics to advocate the surrender of U.S. constitutionally guaranteed property rights and U.S. national sovereignty to the United Nations-based World Health Organization (WHO).[12]


KEI (Formerly CPTech) Works With Liberal U.S. Politicians to Give-Away US Private IP Rights to Developing Countries Calling For Socialized HealthCare Paradigm

Soros-funded KEI/CPTech legitimizes its mission by working with others to redefine the doctrine of sustainable development so as to encourage governments to secure continuous international “science and technology IP transfers”[13] at concession rate prices.[14] Unfortunately, this contorted definition of sustainable development, which Czech President Vaclav Klaus has described in the context of environmental activism as ‘soft socialism’,[15] appeals to anti-market, anti-private property and anti-WTO advocates, as well as, to American multilateralist politicians. Many such politicians now believe that a government-controlled socialized healthcare system which allows for the ‘donation’ of U.S. patents to developing countries at less than fair market value, and thereby minimizes the importance of private intellectual property rights, is necessary in order to prevent the emergence of extreme economic, scientific, technological and social disparities and popular backlashes against American-driven globalization that will likely threaten international peace and security. [16] But, the apologists are not limited to politicians. They also include certain multinational firms[17] and economists[18], who work alongside Soros-funded KEI to preserve their competitive interests[19] and/or public (brand) reputations. At least one partisan bill would effectively relinquish U.S. constitutionally guaranteed private property rights, without payment of just compensation, for the benefit of third country citizens, for ostensible political (foreign diplomacy) gain.[20]

The recent General Accounting Office (GAO) politically-charged report[21] prepared for California Congressman Waxman and Massachusetts Senator Edward Kennedy[22] at the request and applause of activist NGOs, such as Soros-funded KEI, Essential Innovations, Essential Action, etc.,[23] is the latest entry in a parade of public pleas by U.S. multilateralist politicians demanding that American life sciences firms to ‘give-away’ their valuable patents for the benefit of developing countries. The report essentially claims that the Bush administration’s policy of protecting the constitutionally guaranteed exclusive private property rights of U.S. patent holders violates the spirit of the WTO Doha Declaration.[24] Arguably, Messrs. Waxman and Kennedy were likely influenced to prepare this report by the generic drug industry which seeks to obtain greater benefits at the expense of patent holding pharmaceutical and biotech companies. And, it wouldn’t be the first time that Congressman Waxman did the bidding for ‘enlightened’ U.S. industry members with the help of the activist community.[25] Consequently, the suggestion made by Soros-funded KEI’s Weissman that, “Congress should investigate and end [such] practices [that lead to] “Improper interference in the WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property negotiating process, including by pressuring country negotiators not to support positions embodying Doha Declaration objectives”, is disingenuous, to say the least.[26]

[1] See “Public Health Program – Law and Health”, Open Society Institute & Soros Foundation Network, at: http://www.soros.org/initiatives/health/focus/law See also David Horowitz, “The Cult of Soros: A New Foreign Policy”, Wall Street Journal, Letters to the Editor (8/24/06), at p. A11.
[2] See “Geneva Declaration on the Future of the World Intellectual Property Organization”, at: http://www.soros.org/initiatives/information/news/wipo_20040929/wipo_declaration.pdf .
[3] See “Declaration on the Future of WIPO”, News and Announcement - Information Program, Open Society Institute & Soros Foundation Network (9/30/04), at: http://www.soros.org/initiatives/information/news/wipo_20040929 “OSI’s Information Program , together with the Consumer Project on Technology (CPTech), convened a group of experts to draft a ‘declaration’ calling upon the World Intellectual Property Organization (WIPO) to adopt a fairer approach to intellectual property (IP) policymaking. The ‘Geneva Declaration on the Future of WIPO’ arose from a workshop on the future of WIPO that was hosted by the TransAtlantic Consumer Dialogue on September 13 and 14, 2004, in Geneva, Switzerland. The drafters of the declaration— including academics and NGO representatives— are urging WIPO, the United Nations agency that oversees intellectual property, to seriously reconsider its agenda.” Ibid. “We do not ask that WIPO abandon efforts to promote the appropriate protection of intellectual property, or abandon all efforts to harmonize or improve these laws. But we insist that WIPO work from the broader framework described in the 1974 agreement with the UN, and take a more balanced and realistic view of the social benefits and costs of intellectual property rights as a tool, but not the only tool, for supporting creativity intellectual activity. WIPO must also express a more balanced view of the relative benefits of harmonization and diversity, and seek to impose global conformity only when it truly benefits all of humanity. A “one-size fits all” approach that embraces the highest levels of intellectual property protection for everyone leads to unjust and burdensome outcomes for countries that are struggling to meet the most basic needs of their citizens.” See
“Geneva Declaration on the Future of the World Intellectual Property Organization”, supra, at p. 2.
[4] See “Geneva Declaration on the Future of the World Intellectual Property Organization”, at p. 1.
[5] See ―Policy Brief on Intellectual Property, Development and Human Rights: How Human Rights Can Support Proposals for a World Intellectual Property Organization Development Agenda”, Policy Brief 2, 3D (Feb. 2006) at: http://www.3dthree.org/pdf_3D/3DPolBrief WIPO-eng.pdf ); “Human Rights and the Establishment of a WIPO Development Agenda”, 3D Information Note 51 (June 2006), at: http://www3dthree.org/pdf_3D/3Dnote5_WIPO_June06.pdf
[6] See Lawrence A. Kogan, “Rediscovering the Value of Intellectual Property Rights: How Brazil’s Recognition and Protection of Foreign IPRs Can Stimulate Domestic Innovation and Generate Economic Growth”, INT’L J. ECON. DEV. Vol. 8 Nos. 1-2 (Sept. 2006) at: http://www.itssd.org/White%20Papers/ijed-8-1-2-kogan.pdf
[7] One NGO in particular, Consumer Project on Technology (CPTech) (now KEI), has “argued that access to health [care] or medicine and access to knowledge [A2K ] are human rights.” See Mark F. Schultz and David B .Walker, “How Intellectual Property Become Controversial: NGOs and the New International IP Agenda”, citing CPTech, “Health Care and Intellectual Property”, at: http://www.google.com/custom?q=human+rights+&sa=Google+Search&cof=AH%3Acenter%3BAWFID%3A3b5c352b544b655c%3B&domains=www.cptech.org&sitesearch=www.cptech.org ; CPTech, “Access to Knowledge (A2K), at: http://www.google.com/custom?q=A2K&cof=AH%3Acenter%3BAWFID%3A3b5c352b544b655c%3B&domains=www.cptech.org&sitesearch=www.cptech.org Dr. Khor is director of the Third World Network, a Penang-based NGO, and works with developing country governments in opposing the WTO agenda. Dr. Khor notes how participants who attended an A2K experts meeting co-organized by CPTech, the International Federation of Library Associations and the Third World Network, during the February 2005 Geneva WIPO Secretariat‘s Development Agenda Meeting, “proposed… that a treaty on access to knowledge should be based on the human rights model, in which access of knowledge is acknowledged as a human right, that this right is primary, and the rights to holders of copyrights or patents are seen as secondary or exceptions, and should thus be limited and in ways that
would not threaten the prim ary hum an rights.” See, Martin Khor, “Offsetting IPRs’ Adverse Effects on Access to Knowledge”, South - North Development Monitor (Feb. 4, 2005), at: http://lists.essential.org/pipermail/a2k/2005-February/000083.html ; https://arl.org/Lists/SPARC-OAForum/Message/1594.html
[8] As a matter of human rights law, Article 17 of the Universal Declaration of Human Rights expressly states that, “1. Everyone has the right to own property alone as well as in association with others; 2. No one shall be arbitrarily deprived of his property.” In fact, various other provisions within this seminal document, when read together with Article 17, as well as with certain provisions of the ICESCR, support the conclusion that there exists no hierarchy at all among the various types of human rights, whether health, education, or economic-related. See Universal Declaration of Human Rights, supra note 70, at art. 17; See id. pmbl., arts. 2, 3, 8, 12, 17, 25, 27-29, 30; ICESCR, supra note 55, at pmbl., arts. 1.2, 2.2, 4, 5.1, 15.1, 15.3, 25.
[9] “The public health consequences are most profound in the developing world, where high prices typically mean that patients go without life-saving and other essential medicines. There is a U.S. taxpayer component in the global health arena as well, because U.S. aid monies are not uncommonly used to buy drugs invented with federal research support. Bayh-Dole created the climate in which these abuses could occur, but they were not inevitable. Government agencies could have implemented Bayh-Dole on terms that would have prevented or at least greatly limited the abuses that have occurred. With few exceptions, they have declined to do so.” See Testimony of Robert Weissman "The Role of Federally-Funded University Research in the Patent System" Before the Committee on the Judiciary U.S. Senate (Oct. 24, 2007) at pp. 1-2, at: http://judiciary.senate.gov/pdf/07-10-24WeissmanTestimony.pdf
[10] The Bayh-Dole Act was signed into law in 1980, and effectively expanded through administrative and subsequent Congressional action over the next decade. The law aims to promote commercialization of government-funded inventions. It transfers title to government-funded inventions to universities and other contractors. Universities in turn are able to license the inventions to other parties, including on an exclusive basis. Although federal agencies have actively embraced the Bayh-Dole mission of licensing federally funded inventions to private corporations, our experience shows that the government has abrogated its duty to ensure that pharmaceuticals incorporating federally funded inventions are reasonably priced. The result is a public policy outrage, and a public health tragedy. U.S. taxpayers pay to fund R&D. The government turns the fruits of the research over to pharmaceutical and biotechnology companies, which then price gouge U.S. consumers and even the government itself. Thus the industry is able to execute a double swindle of the public. There is little doubt that U.S. consumers experience financial hardship as a consequence, and sometimes have been deprived of needed medicines. The Bayh-Dole licensing system has, in too many cases, distorted and concentrated markets, and facilitated abuses of market power, all with substantial deleterious consequences for pharmaceutical affordability and other public health objectives -- including promotion of the R&D enterprise. Id., at p. 1.
[11] Although the United States has arguably struck the most successful balance between private and public intangible property rights the world has ever known, considering that it remains both the world’s largest economy and the world leader in innovation,101 the United States’ IPR framework covering patents and trade secrets has increasingly become the subject of heated national debate.102 See Michael Luger et al., European Trend Chart on Innovation: Annual Innovation Policy Trends Report for United States, Canada, Mexico and Brazil 2005, EUR. COMM’N ENT. DIRECTORATE-GENERAL i-iii, 4-5 (2005); ORG. OF ECON. COOPERATION & DEV. [OECD], SCIENCE, TECHNOLOGY AND INDUSTRY SCOREBOARD 7-9 (2003), available at http://www.oecd.org/dataoecd/41/0/17130709.pdf (“In the United States, investment in knowledge – the sum of investment in R&D, software and higher education – amounted to almost seven percent of GDP in 2000, well above the share for the European Union or Japan. . . . R&D expenditure has risen faster in the United States (5.4% a year) than in the European Union (3.7%) and Japan (2.8%). . . . OECD data on patent families (a set of patents filed in various countries to protect a single invention) show the existence of more than 40,000 patent families in 1998 in the OECD area, a 32% increase from 1991. The United States accounted for around 36%, followed by the European Union (33%) and Japan (25%).” (emphasis added)). See also F.M. Scherer, The Political Economy of Patent Policy Reform in the United States, Aug. 2006, available at http://www.ksg.harvard.edu/m-rcbg/papers/scherer/PATPOLIC.pdf (unpublished comment, on file with Harvard University).
[12] In fact, at least one such academic has proposed that the U.S. Bayh-Dole Act be amended to legislatively impose a ‘public interest limitation’ on IPRs created as the result of federally funded basic research and development. In addition, he has suggested that the U.S. Government surrender national sovereignty to the WHO by delegating power to the Organization to “issue a compulsory license . . on behalf of the patent holder to relevant generic manufacturers to produce . . drug[s] . . . [in] recogni[tion of the] right of access to essential medicines. . . .” See e.g., Jonathan Kahn, Rights and Practical Access to Medicine, 84 BULL. WORLD HEALTH ORG. 409 (May 2006), available at http://www.who.int/bulletin/volumes/84/5/405.pdf. Indeed, the objectivity of the academics that have promoted alternatives to the current U.S. and international private property rights-based patent and R&D systems appears strained at best. See James Packard Love, Drug Development Incentives to Improve Access to Essential Medicines, 84 BULL. WORLD HEALTH ORG. 408 (May 2006), available at:
http://www.who.int/bulletin/volumes/84/5/405.pdf (discussing how H.R. 417, the Medical Innovation Prize Fund, was proposed by Representative Sanders [I-VT] during 2005 as “a working model for a new paradigm of drug development”). “The immediate cause of high drug prices is government granted patent monopolies, which allow drug companies to charge prices that are often 400 percent, or more, above competitive market prices.” See Dean Baker, Financing Drug Research: What Are the Issues?, CTR. FOR ECON. & POL’Y RES. (Sept. 21, 2004), at Executive Summary and p. 3, available at http://www.cepr.net/publications/intellectual_property_2004_09.htm Indeed, Professor Baker’s anti-patent and pro-government intervention views are not dissimilar to those held by other individuals whom he has credited in his report as giving “helpful comments on an earlier draft.” Id. They include James Love, a healthcare and anti-intellectual property and anti-business activist (his controversial work is referenced throughout this article) and Simone Baribeau, researcher-activist-author and contributor to Marxist publication Political Affairs. See Politicalaffairs.net: Marxist Thought Online, http://www.politicalaffairs.net/article/author/view/1118 (last visited Nov. 1, 2006). Political Affairs is a monthly magazine of partisan Marxist ideology, politics, and culture, and a publication of the Communist Party, USA. See About Us, Political Affairs - A Marxist Monthly, available at http://wwwpoliticalaffairs.net/article/static/17/1/3 (last visited Nov. 1, 2006); Dr. Aidan Hollis would seem to be in favor of greater governmental intervention in the healthcare markets. He is an assistant professor of economics at the University of Calgary in Alberta, who is credited with “devis[ing] a different approach [for stimulating drug innovation]: the government would set up a fund to compensate drug companies based on how much their new drugs improve the quality of life and how often they were used.” Eduardo Porter, Do New Drugs Always Have to Cost So Much?, N.Y. TIMES, Nov. 14, 2004. Professor Hollis also authored an article that appears to have resonated with the WHO CIPIH. He also credits James Love for providing him with “helpful comments, questions and critiques which forced me to clarify my thinking.” See Aidan Hollis, An Optional Reward System for Neglected Disease Drugs (Univ. of Calgary, Inst. of Health Econ., Working Paper Last Updated May 18, 2005), available at http://econ.ucalgary.ca/fac-files/ah/optionalrewards.pdf. (“The essence of the proposal is to offer rewards to drug innovators who relinquish the exclusivity rights of their patents, with the rewards to be based on the incremental health effects of the innovation in developing countries.”). Prof. Hay, a pharmaceutical economist and associate professor at the University of Southern California School of Pharmacy, also seems to be an advocate for more governmental intervention in the healthcare markets – i.e., in the pricing of medicines and medical treatments. See Joel W. Hay & Minnie M. Yu, Drug Patents and Prices: Can We Achieve Better Outcomes, in MEASURING THE PRICES OF MEDICAL TREATMENTS 152, 154 (Jack E. Triplett ed., 1999) (“[D]oes current policy for patent protection and monopoly pricing of innovative medications achieve the best possible outcomes for society? We will argue that the answer is emphatically negative . . .”); See generally Id. at 152-94.
[13] “The US Trade Act 1974 established a link between IPR protection and trade. However, for a long time, at the international level, there was no consensus about such a link. Developing countries were concerned about their own development. They claimed that transfer of technology was needed for development. They also pointed out the risk of being obliged to patent inventions related to public health and nutrition (UNCTAD70).” See Dr Barbara Rosenberg, Director, Secretariat of Economic Defence, Brazilian Ministry of Justice, Presentation Made at “Workshop: Global Intellectual Property From a Brazilian Perspective”, University of Oxford Centre for Brazilian Studies
(11/4/05), at: http://www.brazil.ox.ac.uk/confreports/IP%20report%20final3.pdf
[14] See Martin Khor, “Globalization and the Crisis of Sustainable Development” United Nations University (2002), at: http://www.unu.edu/interlink/papers/WG1/Khor.doc
[15] “As someone who lived under communism for most of his life, I feel obliged to say that I see the biggest threat to freedom, democracy, the market economy and prosperity now in ambitious environmentalism, not in communism. This ideology wants to replace the free and spontaneous evolution of mankind by a sort of central (now global) planning. The environmentalists ask for immediate political action because they do not believe in the long-term positive impact of economic growth and ignore both the technological progress that future generations will undoubtedly enjoy, and the proven fact that the higher the wealth of society, the higher is the quality of the environment. They are Malthusian pessimists”. See Vaclav Klaus, “Freedom, Not Climate is at Risk”, Financial Times (June 13, 2007) at: http://www.ft.com/cms/s/9deb730a-19ca-11dc-99c5-000b5df10621.html .
[16] American multilateralists (apologists) believe that it is absolutely necessary to begin rehabilitating America‘s image internationally, which, they allege, has been sullied by the foreign policy initiatives of the current presidential administration. To do so, they call upon Americans to collectively concede their ‘exceptionalism’ as a nation without peers, as well as, to sacrifice their inalienable individual constitutionally guaranteed private property rights, including intellectual property rights, for the benefit of developing countries and in furtherance of global harmonization. This American doctrine of knee-jerk multilateralism is likely to have negative repercussions for the United States, which holds most of the know-how and technologies that the world wishes to obtain. See, e.g., “Congressman to Secretary Leavitt on WHA R&D Resolution”, IP -Health (5/19/06), at: (http://lists.essential.org/pipermail/ip-health/2006-May/009569.html ; http://www.cptech.org/ip/health/who/59wha/congress05192006.pdf This letter was signed by three well-known congressional Democrats: Tom Allen-D. ME; Lloyd Doggett-D.TX; and Dennis Kucinich-D.OH; one Independent: Bernard Sanders-I.VT; and one Republican: Dan Burton-R .IN . It restates the arguments made by Brazil‘s socialist ruling party and international health activists, such as James Love and Ralph Nader. Coincidentally, the U.N. World Health Organization also happens to embrace these arguments. The position these politicians, bureaucrats and activists have articulated threatens to weaken the U.S. system of exclusive private property rights, especially intellectual property rights, and America‘s competitive advantage in international trade. By advocating in favor of internationalizing health-related technology R&D through means of a UN-style ‘public-private partnership’ R&D treaty, these congressman and activists would obligate the U.S. government to follow UN dictates to instruct U.S. companies how they may conduct basic research and development and
how much profit they can make commercializing inventions based on federally-funded R&D. Consistent with the WHO CIPIH ‘s position, the letter‘s supporters reason that intellectual property rights, by themselves, are insufficient to promote an adequate economic incentive for U.S. industry to commit significant funds to research and development of drugs, medical treatments and technologies that benefit third world country citizens, but don‘t explain why that is necessary if the companies can‘t make a profit doing so. They also allege that the WHO proposal for an international R&D treaty, first proposed by Love and Nader, will actually reduce the cost of drugs to U.S. citizens because other countries’ governments would be obligated under such a treaty to pay their fair (‗equitable‘) share of R&D costs, which they would derive by taxing industry and citizens. However, they do not provide evidence that this would actually occur, because no such evidence exists. These proposals are idealistic and unworkable at best, and misrepresentative at worst. The recommendations set forth in this letter would essentially amount to another hidden tax on American consumers. They also would violate the U.S. Constitution – i.e., it would result in a government ‘taking’ of private property for ‘public use’ without ‘just compensation’, in much the same way that U.S. Supreme Court Justice Stevens’ majority ruling in last year‘s highly controversial Kelo decision would deny individual citizens their private real property rights by providing government with broad discretion to
exercise its eminent domain power via regulation. Furthermore, once this international/national template (framework) is established, it will then likely be applied to the U.S. information and communication technology (ICT) sectors. Apparently, at least one US-based ‘multilateralist’-minded foundation is not very worried about weakening U.S. constitutional property right protections, nationally and abroad, and has recently awarded the NGO operated by health and environmental activists James Love and Ralph Nader a $500,000 startup grant. Their NGO, Knowledge Ecology International was formerly known as CPTech. See Judy Sarasohn, “An Honor and a Boon for Nine Nonprofits”, Washington Post, The Federal Page (8/24/06), at p. A19,at: http://www.washingtonpost.com/wp-dyn/content/article/2006/08/23/AR2006082301670.html .
[17] American ‘multilateralist’ include business leaders, as well. In a recent Financial Times op-ed article, IBM chief executive Sam Palmisano argues in favor of more globally, and thus, culturally integrated multinational companies that open up access to and freely share technologies and business standards with other countries and their industries, which are now made more easily available by the evolving global information technology and communications infrastructure. He reasons that such information and technology sharing (give-aways) would enable such companies to “connect m ore intimately with partners, suppliers and customers, and most importantly… to engage in multifaceted collaborative innovation. This kind of innovation is much m ore than the creation of new products”, he states. “It is also how services are delivered… This kind of innovation changes how business processes are integrated, how companies and institutions are managed, how knowledge is transferred, how public policies are formulated and how enterprises, communities and societies participate in and benefit from it all… Today, innovation is inherently global… But shifting to the model of globally integrated enterprises also presents big challenges for leaders in every sector of society… This will mean significant changes in organizational culture, new forms of partnership among multiple enterprises and segments of society and new standards for managing a com plex m arketplace.‖ In other words, companies will have many masters, including and beyond governments (see below)*. Interestingly, if U.S. companies don‘t subscribe to his thinking, the alternative is unthinkable. “These changes will take time. But the alternative to global integration is not appealing: left unaddressed, the issues surrounding globalization will only grow. People may ultimately elect governments that impose strict regulations on trade or labour, perhaps of a highly protectionist sort. Worse, they might gravitate toward more extreme forms of nationalism, xenophobia, and anti-modernism [a oblique reference to terrorism ]” (emphasis added). See Samuel Palm isano, “Multinationals Have Been Superceded”, Financial Times (6/12/06), at p. 15. The editors of the Financial Times, of course, picked up on this rhetoric. “Sam Palmisano, head of International Business Machines, today calls on multinationals to evolve into a new type of corporation if they are to avoid an antiglobalization
backlash that leads to the election of governments hostile to the interests of big business” (emphasis added). See Francesco Guerrera and Richard Waters, “IBM Chief Wants End to Colonial Companies”, Financial Times (6/12/06), at p. 1. It is arguable whether Mr. Palmisano is actually apologizing for the success of American capitalism/globalization, and that he actually recommending that Americans sacrifice their technologies and innovations (i.e., their constitutionally protected private property rights) for the greater good of global society to avoid mass anti-globalization activism. *See also “How to Regulate the Global Corporation”, Editorial, Financial Times (6/13/06), at p. 14. “Mr. Palmisano’s principal suggestion is to develop a global regulatory system through better cooperation between regulatory agencies (as apposed to creating a single behemoth). Companies might operate globally diverse supply chains. But they are still technically domiciled in one place and beholden to one set of shareholders. It should be the task of politicians everywhere to encourage greater cooperation between jurisdictions and to improve corporate governance. But this can only be part of the answer. As the world continues to integrate, reconciling tensions between efficient global economics and local democratic politics w ill test everyone‘s
imagination.” Id.
[18] Some American economists, as well, fall into the multilateralist apologist camp, such as Joseph Stiglitz, a well-known spokesperson for ‘political liberalism’ (social justice, environmentalism). According to a recent New York Times book review , Stiglitz’ new book entitled, “Making Globalization Work”, focuses on how ‘neoliberal economics’ derided as ‘market fundamentalism’‘ or the ‘Washington consensus’ “ vandalized the developing world” (emphasis added). It also describes how “smart people in Washington and New York with the correct ideas can help set the world right… Dr. Stiglitz’s vision for more equitable globalization — with caveats about the toughness of
the task — entails freer trade (no more loopholes for rich countries or corporate lobbies), curtailed intellectual property rights (‘monopolies’) and green accounting (factoring resource depletion and ecological damage into G.D.P.). It also means more transparency in international finance (to curb corruption), debt forgiveness (foolhardy creditors must take responsibility, too) and democracy (less secretive procedures opened to nongovernmental organizations and others). “It seemed terribly unfair,‘ he w rites, ‘that in a world of richness and plenty, so many should live in such poverty.’ Unfair it is. Designing a new global trade regime is a snap for Dr. Stiglitz. But how might it be put into place?... Often, he exhorts. ‘Rich countries’, he writes, ‘should simply open up their markets to poorer ones, without reciprocity.‘ As for global enforcement of rules, ‘w hat is needed is an international tribunal.’ Would its judges be appointed or elected? Would there be some disincentives, too, for global class-action suits? Details omitted. There is another catch. Developing countries, after getting their ‘fair share’, must ‘use the money well,’ he writes. So they‘ll need nonkleptocratic governments, uncensored media, enforced property rights, the rule of law. How to acquire them? He wants ‘developed country governments to provide role models’, and to inhibit the collusion in malfeasance abroad. Intent on championing regulation over an ‘unfettered’ market, he turns to postwar Japan and South Korea as examples of how governments can pilot an economic boom, though this view has been undermined on empirical grounds. He commends China for go-slow liberalization, without noting that the late-70‘s dismantling of peasant communes was a liberalizing big bang or that critics inside China today accuse the central government of abandoning economic liberalization, under the guise of gradualism , to gorge on the spoils of office” (emphasis added). See Stephen Kotkin, “Aiming to Level a Global Playing Field”, New York Times, Off the Shelf (9/3/06), at: http://www.nytimes.com/2006/09/03/business/yourmoney/03shelf.html?_r=2&oref=slogin&oref=slogin . See also Joseph Stiglitz, “We Have Become Rich Countries of Poor People”, Financial Times Comment (9/8/06), at p. 11. “We see an unfair global trade regime that impedes development and an unstable global financial system in which poor countries repeatedly find themselves with unmanageable debt burdens… Globalization seems to have unified so much of the world against it, perhaps because there appear to be so many losers and so few w inners… Growing inequality in the advanced industrial countries was a long predicted but seldom advertised consequence: full economic integration implies the equalization of unskilled wages throughout the world… Unfettered globalization actually has the potential to make many people in advanced industrial countries worse off, even if economic growth increases… The Scandinavian countries have shown there is another way. Investment in education and research and a strong safety net can lead to a more productive and competitive economy. A t the core of m any o f globalization’s failures is a simple fact: economic globalization has outpaced the globalization of politics and mindsets” (emphasis added). Id.
[19] Interestingly, extremists James Love and Ralph Nader, of the Consumer Project on Technology (CPTech) have long worked together to develop ‘open source methods’ as an international paradigm in both the health and information technology sectors. See James Love and Ralph Nader, “What To Do About Microsoft”, Le Monde Diplomatique (Nov. 1997), at: http://mondediplo.com/1997/11/nader ; James Love, “Nader Colleague Responds”, Information Week (6/13/02), at: http://wwwinformationweek.com/story/IWK20020613S0004 ; Ralph Nader and James Love, “Opinion: Ralph Nader Tells Feds to Stop Microsoft”, CNN.com (11/11/98), at: http://www.cnn.com/TECH/computing/9811/11/nader.idg/index.html ; Ralph Nader and James Love, “A Framework for ICANN and DMS Management”, proposals presented by Ralph Nader to “Governing the Commons: T he Future of Global Internet Administration”, a conference organized by Computer Professionals for Social Responsibility, (9/25/99), at: http://www.eff.org/Infrastructure/DNS_control/ICANN_IANA_IAHC/19990927_nader_icann_coms.html ; “Ralph Nader and James Love February 18, 1999 Letter to Secretary of State Madeleine Albright Regarding NGO/State Dialogue on International HIV/AIDS and Intellectual Property”, at: http://www.cptech.org/ip/health/cl/mafeb181999.html ; Sabin Russell, “New Crusade To Lower AIDS Drug Costs Africa's Needs at Odds With Firms’ Profit Motive” San Francisco Chronicle (5/24/99), at: http://www.sfgate.com/cgibin/article.cgi?file=/chronicle/archive/1999/05/24/MN104738.DTL ; “CPT Urges Gore to Reverse Policy on South African Policies Regarding Access to HIV/AIDS Drugs, Other Medicines” Common Dreams News Wire (4/9/99), at: http://www.commondreams.org/pressreleases/april99/040999i.htm
[20] In the U.S. Senate, there is currently proposed federal legislation – an amendment to U.S. patent law – which arguably violates the U.S. Bill of Rights Fifth Amendment ‘Takings’ clause. On May 25, 2006, Senator Patrick Leahy (D-VT), the ranking Democrat on the Senate IP subcommittee, introduced legislation – S .3175, entitled, “T he Life-Saving Medicines Export Act of 2006” – “A bill to amend title 35, United States Code, with respect to establishing procedures for granting authority to the Under Secretary for Commerce for Intellectual Property and Director of the Patent and Trademark Office to grant compulsory patent licenses for exporting patented pharmaceutical products to certain countries consistent with international commitments made by the United States, and for other purposes…” See Congressional Record – Senate (May 25, 2006), S5245-5252, at p. S5245, at: http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2006_record&page=S5245&position=all . “Under my bill, U.S. generic manufacturers would be allowed to make generic versions of patented drugs without the consent of the patent holders. Those patent holders would receive compensation in the form of a royalty payment under a so-called ‘compulsory license’ and the generic companies would then be required to sell those less-expensive generic drugs only to least-developed or developing nations. Use of a compulsory license occurs when Congress determines that there is an important need which should be addressed” (emphasis added). STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 25, 2006), Ibid., at p. S5246, at: http://frwebgate.access.gpo.gov/cgibin/getpage.cgi?position=all&page=S5246&dbname=2006_record . A pharmaceutical product for purposes of the bill is defined as, “any patented pharmaceutical product, or pharmaceutical product manufactured through a patented process, including any drug, active ingredient of a drug, diagnostic, or vaccine needed to prevent or treat public health problems.” S.3175 Sec. 5(a)(7) at Cong. Rec. pp. 5250 -51. The Leahy bill, if adopted, would implement a proposed amendment to the WTO TRIPS Agreement provisions entitling pharmaceutical exporting country governments to issue compulsory licenses on privately owned patented drugs for the benefit of developing countries that lack their own drug manufacturing capacity. The amendment will go in effect, for those nations which adopt it, once 2⁄3 of the member nations adopt it. The current waiver approach, allowing nations to implement it now, will remain in place until the permanent amendment is adopted. Section 3 of the Leahy bill specifically “requires the Director of the United States Patent and Trademark Office to issue a compulsory license (permission to make and sell a patented product under this new Act) to permit generic companies to make and export medicines under the terms of WTO international agreements under several conditions.” Section 3 of the Leahy bill also grants the U.S. government (i.e., the PTO Commissioner) the authority to determine the price of the drugs and what the royalty rate shall be. “The holder of the compulsory license shall pay a royalty to the patent holder, as determined by the Director of the PTO within a limited range of possible rates set forth in the bill, taking into account such factors as humanitarian needs, the economic value to the importing nation, and the need for low-cost pharmaceutical products by persons in the importing nation… The maximum royalty for any shipment shall not exceed 4 percent times the commercial value of the pharmaceutical products to be exported under this Act under that supply agreement.” Thus, Section 3 of the bill only requires that “Efforts must have been made by the generic company to buy the right to make and sell the medicine under normal business arrangements with the patent holders.” It does, not, however, require that reasonable efforts be made to negotiate a fair arms-length price. Moreover, Section 3 of the Leahy bill would grant broad discretion to the PTO Commissioner to issue compulsory licenses for the benefit of multiple developing countries at the same time, and, without any benchmarks, to arbitrarily waive the provisions of the bill w hen deem ed necessary to achieve the bill‘s underlying objective. ―In addition, the Director may accept combined applications from multiple eligible countries. Note that in emergency situations the Director may waive provisions of the bill in a manner consistent with the WTO agreements” (emphasis added). Section 4 of the bill expressly declares that “(Not a patent infringement): This section makes clear that compulsory licenses issued under this Act shall not be considered an infringement of a patent” (emphasis added). Consequently, the Leahy bill “would allow U.S. generic drug firms to manufacture low-cost generic versions of patented medicines for export to nations in need when a voluntary agreement between the generic and the brand-name U.S. compan[ies] cannot be negotiated. Those patent holders would get royalty payments, and the generic firms would then be required to sell those less-expensive drugs only to the poorest countries… Leahy‘s bill would amend U.S. patent law to allow implementation of the low-cost drug provisions of a 148-nation agreement completed last year. The Bush Administration itself has not proposed any implementing legislation…” See “Leahy Unveils Bill to Foster Low-Cost Drugs for World‘s Poorest”, Press Release (5/21/06), at: http://leahy.senate.gov/press/200605/051906.html The fact that the European Union previously promulgated its own regulation to implement the proposed WTO should not influence how the U.S. Congress treats U.S. private property rights. Interestingly, considering the tone of the European regulation, it is not surprising that Senator Leahy justifies the need to enact his bill on moral grounds. “This is a moral issue. I am working with a number of religious groups, humanitarian organizations, international assistance groups, and generic drug companies on this effort” (emphasis added). Id. In addition, Senator Leahy justifies this ‘taking‘ of private property‘ for ‘public use’ without ‘just compensation’ on ‘CRISIS’ grounds - as necessary to “enhance America‘s image in the world” and to “contain diseases in other nations” before they strike Americans and others traveling abroad, who can then bring the diseases with them back to America. “Thus, the bill addresses both the urgent needs of millions of low-income families in impoverished nations while protecting the interests of the patent owners of these life-saving medicines and w ill hopefully help enhance America‘s image in the world. For those only interested in self-interest rather than humanitarian aid, note that because of the globalization of travel our Nation is at risk from failure to contain diseases in other nations. America has a strong self-interest in combating diseases in foreign nations. A surprising number of new diseases have emerged in recent years. Some of these new diseases are variations of existing diseases. The volume of people and cargo going to and from distant nations is astounding. According to ‘Rx for Survival’ by Philip Hilts, ‘if you count only travel between nations with a heavy burden of disease and those with less disease, more than a million people a week are making the trip. The more viruses and bacteria mutant inside animals and people, and the more people and goods travel throughout the world, the more residents living in the United States are at risk of being harmed by dangerous diseases.’” STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - May 25, 2006), Id., Cong. Rec.-Senate at p. S5246, supra.
[21] See “Intellectual Property: U.S. Trade Policy Guidance on WTO Declaration on Access to Medicines May Need Clarification”, U.S. Government Accountability Office (Sept. 2007) at: http://oversight.house.gov/documents/20071030125409.pdf
[22] “Regrettably, the U.S. trade strategy has prioritized patents over public health," said Rep. Waxman. ‘The Democratic leadership in Congress has pushed the White House to make significant changes in the Peru and other recent free trade agreements. I support these important first steps to achieve a more balanced policy. But as today's report demonstrates, we have a long way to go in improving the public health aspects of U.S. trade policy as a whole.’ ‘The Bush Administration must stop putting the financial interest of the pharmaceutical industry ahead of the needs of the poor and sick in developing countries,’ said Sen. Kennedy.” See “New GAO Report Indicates U.S. Trade Policy Neglects Public Health Issues” Press Release (Oct. 30, 2007) at: http://oversight.house.gov/documents/20071030130846.pdf
[23] “The GAO report highlights in some detail the many ways that the Bush administration has violated the Doha provision in the 2002 Trade Promotion Authority legislation. The Act designated respecting the Doha Declaration on the TRIPS Agreement and Public Health as a principal negotiating objective related to intellectual property. ‘It is time for the Bush administration to stop defending Big Pharma's interests in extended patent monopolies, at the expense of public health," says Robert Weissman, director of Essential Action, a Washington, D.C.-based organization that aims to expand access to essential medicines. "The life-and-death consequences are just too high.’ ‘A new policy should have advancing public health, rather protecting large corporate contributors, as its starting point," said Weissman. "From there, it's easy to see what to do: promote generic competition — including but not limited for the AIDS drugs that the President's own AIDS program is purchasing — stop pushing for higher patent and drug monopoly standards in developing countries, and explore new ways to promote both innovation and affordability.’” See “GAO Report Highlights How U.S. Policy Undermines Public Health”, Essential Action Press Release (Oct. 31, 2007) at: http://www.essentialaction.org/access/index.php?/archives/79-GAO-Report-Highlights-How-U.S.-Policy-Undermines-Public-Health.html
[24] “The GAO report, "Intellectual property: U.S. Trade Policy Guidance on WTO Declaration on Access to Medicines May Need Clarification” ‘assesses how the office of the U.S. Trade Representative (U.S.T.R.), along with other agencies, has interpreted and implemented the 2002 Trade Promotion Authority (TPA) Act, which affirmed the United States' commitment to the Doha Declaration. The report indicates that until the current congressional leadership negotiated public health modifications to pending free trade agreements, U.S.T.R. made virtually no changes in its trade strategy to advance the goals of the Doha Declaration. It further finds that the Bush Administration entered into a series of free trade negotiations with developing countries demanding provisions that threaten the ability of our trade partners to take necessary public health measures.’” Id.
[25] See Lawrence Kogan, “Claims of Improper U.S. Lobbying Quite a REACH”, EU Reporter (May 3-7, 2004) at p. 18, at: http://www.itssd.org/Publications/1-20_EUR_04May04.pdf (Waxman worked with environment activist community to criticize Bush administration policy as unduly interfering with EU chemicals policymaking, notwithstanding that its US government conduct was consistent with WTO law).
[26] “GAO chose to limit the scope its report. There are other ways in which the executive branch is working to undermine the promise of the Doha Declaration, beyond what is included in the report. Congress should investigate and end these practices. They include: Misguided and poor quality technical assistance that encourages developing countries to overprotect pharmaceutical patent monopolies (this is mentioned in an appendix to the GAO report, but merits much closer scrutiny); Pressure on the World Health Organization (WHO) — including efforts to suppress important reports — not to advise countries on how to make medicines affordable; and Improper interference in the WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property negotiating process, including by pressuring country negotiators not to support positions embodying Doha Declaration objectives.” See “GAO Report Highlights How U.S. Policy Undermines Public Health”, Essential Action Press Release, supra.

WHO: Long on agenda, but short on the facts

http://www.taipeitimes.com/News/editorials/archives/2007/11/04/2003386189

Tapei Times

By Jeremiah Norris

Sunday, Nov 04, 2007, Page 8

The WHO makes great sport of taking the pharmaceutical industry to task for its inability to provide everyone in the developing world with the drugs they need. This so-called market failure is being used at negotiations in Geneva this month to bring research and patents under official control, managed by the WHO.
But the WHO has trouble managing itself. Before it pushes on with this agenda, it should make sure it has strong evidence.
In fact, though, it lacks evidence for this -- and many more of its global recommendations.
In the May issue of The Lancet, researchers found that "WHO guidelines do not seem to be closely followed when [the] WHO develops recommendations for member states."
The editor of The Lancet told reporters that this "is a pretty seismic event ... it undermines the very purpose of [the] WHO."
The most sensitive indicator of broad health trends is the infant mortality rate. In September, UNICEF released new data showing that "the global rate for the under-five population fell from 20 million annually in 1960 to 9.7 million in 2006."
But The Lancet published in the same month an article showing "disappointing results in the reduction of child mortality worldwide" and concluded by asking "why should journals trust the research such agencies produce and why should anyone trust their health policies and initiatives?" The WHO's new Draft Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property (IGWG) aims to further weaken intellectual property and bring research and development under the control of governments and international bodies. It claims there are too few drugs for the "neglected" tropical diseases found in poor countries and that drug prices -- and the international patent system -- prevent the poor from getting what medicines do exist.
In fact, three of these "neglected" diseases are AIDS, tuberculosis and malaria. Since 2004, donors have spent an enormous US$41.8 billion on them.
Six tropical diseases, often considered "neglected," account for 0.3 percent of all global deaths -- and all of these diseases have multi-million-dollar research projects underway.
As for the alleged barrier of drug prices, numerous studies -- including the WHO's -- show that the most important barrier to the poor getting medicines is lack of medical staff and infrastructure to administer the drugs. And the biggest factor in the actual price paid by patients is local regulation, taxes and tariffs in poor countries.
So there is plenty of evidence, but the WHO is ignoring it.
Indeed, past evidence, from telephone monopolies to Chinese central planning, shows that nationalizing any business stifles innovation and, in the case of drugs, would hinder future efforts to create drugs for the poorest countries. This is particularly threatening, as drug-resistant strains of HIV/AIDS, malaria and tuberculosis become more prevalent in these regions.
The WHO wants to bring drug development under official control, replacing the commercial research and development, underpinned by intellectual property rights, that has proved so successful in so many fields. Not only will this treaty undermine innovation, it is supported by false premises and flies in the face of real evidence.
Taiwan, denied participation in the WHO, knows all too well how politics trumps evidence or sense in international organizations. Member states need to knock this treaty on the head at this month's meeting before the WHO does lasting damage to global health.

Jeremiah Norris is director of the Center for Science in Public Policy at the Hudson Institute, a policy think tank in Washington.

ITSSD Response to the Draft Global Strategy and Plan of Action

Submitted: September 30, 2007
Focus (par. 1)
The ‘Focus’ section of the DGSPA inexplicably expands the number of ‘developing country diseases’ that new drugs, treatments and therapies to be created under the Draft Global Strategy and Plan of Action (DGSPA) would target. The CIPIH previously focused primarily on encouraging developing country exercise of the TRIPS ‘flexibilities’ allegedly recognized by WTO members within the Doha Declaration on the TRIPS Agreement and Public Health. As your committee members are well aware, that ministerial document was expressly intended to respond only to three diseases - namely “HIV/AIDS, tuberculosis and malaria [-] and other epidemics... afflicting many developing and least-developed countries”.1 WHA 59.24, which serves as the basis for this DGSPA, subtly adopted an expanded interpretation of this statement as its core mandate and focus – to secure “needs-driven essential health research and development relevant to diseases that disproportionately affect developing countries”. This phraseology is now contained within paragraph 1.2 of the DGSPA.2
The effort of the IGWG to expand the number of diseases potentially falling within the TRIPS ‘flexibilities’ is immediately recognizable within the first paragraph of the DGSPA, entitled ‘Context’.
Reducing the very high incidence of communicable diseases in those countries is an overriding priority. At the same time, it is important to ensure that the increasing prevalence of noncommunicable diseases in those countries is recognized and addressed.3
Consequently, it is no surprise that the first footnote within the DGSPA’s ‘Focus’ section adds 12 additional diseases beyond the 3 mentioned above, some of which are communicable and others which are not.4 In particular, given the IGWG’s categorizing of cardiovascular disease as a disease
1 “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.” See “Declaration on the TRIPS Agreement and Public Health”, WT/MIN(01)/DEC/2 (Nov. 20, 2001), at par. 1, at:
http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm .
2 “(1.2) facilitating upstream research on new and existing products for diseases that disproportionately affect developing countries”. See “Element 1. Prioritizing research and development needs”, “Draft Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property”, Intergovermental Working Group on Public Health, Innovation and Intellectual Property A/PHI/IGWG/2/2 (July 31, 2007) (hereinafter referred to as ‘DGSPA’),
Annex at p. 4.
3 Id., Annex at par. 1, p. 3.
4 “... The Commission highlighted the need to focus on Type II and Type III diseases and the needs of developing countries in relation to Type I diseases. [FN 1] ...Type I diseases...increasingly prevalent in developing countries: affecting developing countries, it is no surprise that the Government of Thailand was emboldened this past year to illegally declare a compulsory license on Sanofi’s patented heart disease drug Plavix.5
In light of the above, reasonable persons may seriously question whether the IGWG is endeavoring to exploit the term ‘epidemic’, which appears within the Doha Declaration on the TRIPS Agreement and Public Health. No doubt, IGWG members are well of the public confusion and ‘fear’ that has arisen as the result of various definitions of the term ‘epidemic’ being employed by epidemiologists, non-healthcare professionals and the lay community.6 Furthermore, the WHO’s recently released Health Report 2007 evidences an effort to incite public fear78 and expand the diabetes, cardiovascular disease and cancer... Type II diseases are...[f]or the purposes of the strategy...HIV/AIDS and tuberculosis... Type III diseases are those that... disproportionately affect poor and marginalized populations prioritized by the UNICEF/UNDP/World Bank/WHO Special Programme for Research and Training in Tropical Diseases: Chagas disease, dengue and dengue haemorrhagic fever, leishmaniasis, leprosy, lymphatic filariasis, malaria, onchocerciasis, schistosomiasis and human African trypanosomiasis.” Id., at fn 1, p.3.
5 See Lawrence A. Kogan, “Forced Licensing of Drug Patents Reflects ‘IP Counterfeiting’ Efforts on World Stage”, Washington Legal Foundation Legal Backgrounder Vol. 22 No. 22 (June 22, 2007) at: http://www.itssd.org/Publications/ForcedLicensingofDrugPatentsReflectsIPCounterfeitingEffortsonWorldStage-
WLF06-22-07kogan.pdf .
6 “Interpretation of the term ‘epidemic’' could depend on the context in which it is used. Epidemiologists use it in its most general form and define an epidemic as follows: ‘An epidemic is the occurrence in a community or region of cases of an illness, specified health behavior, or other health-related events clearly in excess of normal expectancy; the community or region, and the time period in which cases occur, are specified precisely... The term epidemic is variously defined. The broad definition given by epidemiologists ± namely, more disease than is anticipated by previous experience ± is less meaningful to the general public. In some ways it conflicts with the definitions found in the popular literature, which generally imply danger to the public and a very large number of victims.”. See Manfred S. Green, Tiberio Swartz, Elana Mayshar, Boaz Lev, Alex Leventhal, Paul E. Slater and Joshua Shemer, “When is an Epidemic an Epidemic?”, Perspective Magazine, IMAJ . Vol. 4, January 2002 at pp. 1, at:
http://www.ima.org.il/imaj/ar02jan-1.pdf . See also Wikipedia (The term ‘epidemic’ is defined as a classification of a disease that appears as new cases in a given human population, during a given period, at a rate that substantially exceeds what is "expected," based on recent experience - the number of new cases in the population during a specified period of time is called the "incidence rate”) (emphasis added), at: http://en.wikipedia.org/wiki/Epidemic .
7 The WHO report summary is intended to incite public fear about epidemics, and consequently, public clamor for more international health regulation at the expense of private intellectual property rights. “The world has changed dramatically since then. Now, every day, up to three million people travel by air to another city, another country, or another continent. Every day, millions of tons of cargo are shipped around the world by air, land and sea. Every day,
the constant movement of people and products carries with it the potential to spread highly infectious diseases and other hazards more rapidly than at any time in history. A sudden health crisis in one region of the world is now only a few hours away from becoming a public health emergency in another. In the last five years, WHO has verified more than 1100 epidemic events. Among them was a deadly new disease, SARS - Severe Acute Respiratory Syndrome - which sparked an international alert in 2003. Today, there is a real and continuing threat of a human influenza pandemic that could have much more serious human and economic consequences” (emphasis added). See “Summary - A Safer Future: Global Public Health Security in the 21st Century: The World Health Report 2007, World Health Organization at:
http://who.int/bookorders/anglais/detart1.jsp?sesslan=1&codlan=1&codcol=24&codcch=2007 .
8 “The World Health Report 2007 - A safer future: global public health security in the 21st century marks a turning point in the history of public health, and signals what could be one of the biggest advances in health security in half a century. It shows how the world is at increasing risk of disease outbreaks, epidemics, industrial accidents, natural disasters and other health emergencies which can rapidly become threats to global public health security. The report
explains how the revised International Health Regulations (2005), which came into force this year, helps countries to definition of the term ‘epidemic’ beyond that expressed currently within the DGSPA, to include 8 additional ‘epidemic-prone’ diseases,9 for a total now of 23 diseases that potentially fall within the ‘scope’ and ‘focus’ of the DGSPA.
Element 1. Prioritizing Research and Development Needs Within Element 1, the DGSPA paragraphs 8 and 9 (1.1) urges WHO member nations to identify “Gaps in research on Type II and Type III diseases and on the needs of developing countries in relation to Type I diseases”. As noted above, this call for action concerns non-epidemic type diseases, which is clearly beyond the scope and intent of the Doha Declaration on the TRIPS Agreement and Public Health, which the IGWG must take into account.
Paragraph 9 (1.2), furthermore, recommends that in order to facilitate ‘upstream research on new and existing products for diseases that disproportionately affect developing countries”, it is necessary to “(a) improve accessibility to compound libraries...” However, it does not specify what intellectual property protections would be afforded for purchased or otherwise acquired pharmaceutical compounds needed to develop and ultimately expand such a library.
Element 2. Promoting Research and Development
Paragraph 10 within Element 2 of the DGSPA mandates developed countries to ‘invest in’ the financing of measures that “promote, coordinate and finance public and private research in both developed and developing countries into Type II and Type III diseases and into the needs of developing countries in relation to Type I diseases...” As noted above, this call for action concerns nonepidemic type diseases, which is clearly beyond the scope and intent of the Doha Declaration on the TRIPS Agreement and Public Health, which the IGWG must take into account.
Within Element 2, the DGSPA paragraph 11 (2.3) suggests that in order to promote “upstream research and product development in developing countries”, it is necessary to “(a) promote discovery science, including through open-source methods, in order to develop a sustainable portfolio of new products” and to (b) promote access to drug leads identified through the screening of compound libraries”. work together to identify risks and act to contain and control them. The regulations are needed because no single country, regardless of capability or wealth, can protect itself from outbreaks and other hazards without the cooperation of others. The report says the prospect of a safer future is within reach - and that this is both a collective
aspiration and a mutual responsibility” (emphasis added). See “The Current World Health Report”, World Health Organization at: http://www.who.int/whr/en .
9 The WHO report identifies the following epidemic-prone diseases: 1) Cholera; 2) yellow fever; 3) epidemic meningococcal;
4) Severe Acute Respiratory Syndrome (SARS); 5) avian influenza; 6) Ebola; 7) Marburg
haemorrhagic fever; 8) Nipah virus. See “The World Health Report 2007 - Global Public Health Security in the 21st Century: A safer future”, World Health Organization (Sept. 2007) at p. x, at:
http://www.who.int/whr/2007/whr07_en.pdf .
Reasonable persons may seriously question whether the use of open-source methods will actually promote discovery science since nothing actually will be owned exclusively at the end of the day by those who make the contributions. Lack of adequate patent and trade secret protection for contributed knowledge and other information and reasonable market-based level compensation are likely to serve as disincentives to key potential participants. No mention is made either of the need for IP protections at the screening level for patented and non-patented compounds qualifying astrade secrets.
DGSPA paragraph 11 (2.4)(c) recommends that national governments “support further discussion of a medical research and development treaty” to improve global coordination and financing of medical research and development”. Reasonable persons may conclude that such a proposal actually reflects an effort to impose a new global ‘universal access to healthcare’ tax to be collected directly by national governments and then submitted to and administered ultimately by the WHO, a UN body. Whether or not this is successful will depend on a transparent and open public debate taking place within each WHO member country which entails a thorough review of the proposal by national legislatures and considered taxpayer input.
It should be noted that such a global tax would be conceptually and effectively distinct from a purely nationally-based tax such as the French national solidarity tax. That tax, which is borne by airline passengers boarding flights in France and traveling throughout Europe, is extra-territorial in scope, and perhaps even WTO-inconsistent. It was first imposed by the Government of France during 2006 “on airline tickets to fund a drug purchase facility”. The collected tax revenues are then forwarded by the French Government to the UNITAID. Although it is said that such tax “has not faced heavy criticism from the French public... the airline industry claims that the airline tax will hurt tourism”. 10 The French Government has promoted the tax as a way to use “money...to provide medical access to the poorest citizens of developing countries without compromising the rights of patent holders”.11 While reasonable persons may conclude that such a tax is a novel idea promoting a worthy cause, the DGSPA would not stop at such a tax. It would also require the international weakening of intellectual property rights which the French tax was intended to prevent.
Element 4. Transfer of technology
Within paragraph 14 of Element 4, the DGSPA provides that “The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and tothe transfer and dissemination of technology // to the mutual advantage of producers and users of 10 “Effective on July 1, 2006, passengers boarding aircrafts in France now have to pay a surcharge of 1 euro per economy class ticket and 10 euros per business class ticket if their destination is in the European Union. For flights out of Europe, the surcharge is 4 euros for economy class and 40 euros for business class. France expects its airline tax to
generate upward of 200 million euros for UNITAID annually.” See Jacqueline Klosek and Kendrick Nguyen, “French Solidarity Tax: Providing Access to Medicine Without Compromising IP Rights”, Global Intellectual Property Asset
Management Report, Vol. 8, No. 9 (Sept. 2006) at p. 1, at:
http://www.goodwinprocter.com/getfile.aspx?filepath=/Files/Publications/klosek_nguyen_9_06.pdf .11 Id. technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.”Reasonable persons are likely to agree with the first portion of this statement, namely that intellectual property rights should contribute to technological innovation and the transfer of technology to the public. This is already being facilitated via the maintenance of robust patent examination and enforcement systems within many countries. Unfortunately, reasonable persons may disagree with the second portion of this statement, whose language indirectly reflects social compact theory, and thus, a political compromise within each WHO member country.
What is considered a ‘balance’ of rights and obligations varies from country–to-country. Within the US, for example, intellectual property rights are recognized within US federal and state law as an absolute form of exclusive private property with a limited useful life, and NOT as ‘public goods’ for the ‘taking’ without just compensation, and thereby subject to government’s arbitrary exercise of police power. It is for this reason that the World Bank concluded that the US is the global leader in patent filings and in innovations.12 Therefore, the proper balance conducive to social and economic welfare within the US is that which provides full and complete compensation for its use or acquisition, in exchange for the public disclosure and sharing of new patented inventions and innovations with society which, in turn, serves as the basis for new inventions and innovations. This quid pro quo ensures not only the reimbursement of all costs and expenses, including time, incurred to discover and develop an invention and to then commercialize it into market-relevant healthcare products from which consumers may later benefit, but also that the inventor and/or innovator can earn a reasonable market-rate profit to boot. This encourages greater public enthusiasm toward inventions and innovations, as well as greater investor enthusiasm in new technologies. In the context of developing countries, to the extent that the IGWG fosters greater governmental and public respect for the role that exclusive private property rights can play in promoting foreign direct investment and technological and managerial spillovers, the more likely developing country citizens will be afforded better healthcare and access to medicines, in fulfillment of national healthcare programs.13 ‘Universal access to healthcare’ need not be synonymous with free public healthcare at the expense of private property interests.
The DGSPA paragraph 15 (4.3) recommends “developing mechanisms to manage intellectual property in order to promote transfer of and access to key technologies”. Intellectual property rights are currently managed/ administered by national laws to promote inventions and innovations that benefit national societies. To the extent that national governments have acceded to the WTO TRIPS Agreement as part of the Uruguay Round of trade negotiations, and to the Paris Convention on Patents at the WIPO, such governments are obligated to provide at least a minimal level of legal
12 See Lawrence A. Kogan, Brazil’s IP Opportunism Threatens U.S. Private Property Rights, 38 UNIV. OF MIAMI L. REV. 1 (Fall 2006) 24-25, at http://www.itssd.org/Publications/IAL105-II(frompublisher)[2].pdf .
13See Lawrence A. Kogan, Rediscovering the Value of Intellectual Property Rights: How Brazil’s Recognition and Protection of Foreign IPRs Can Stimulate Domestic Innovation and Generate Economic Growth, INT’L L J. OF ECON. DEV., Vol. 8, Nos. 1-2 (Sept. 2006) at 157-174, 224-248 at http://www.itssd.org/White%20Papers/ijed-8-1-2-kogan.pdf .
protection for intellectual property rights such as patents consistent with these international agreements. In other words, the WTO and the WIPO are the intergovernmental fora with specialized knowledge and jurisdiction in matters relating to intellectual property management; neither the WHO in general, nor the CIPIH IGWG, possesses the knowledge, expertise or jurisdiction to override these other organizations when it comes to either property rights or trade concerns. In fact, any effort made by the CIPIH IGWG and WHO to usurp jurisdiction from these other international organizations is arguably ultra vires, and thus, beyond the WHO’s core competencies as spelled out by the WHO constitution.14 Paragraph 15 (4.3)(a) of the DGSPA recommends the promotion of “patent pools of upstream and downstream technologies”.
This recommendation, however, fails to address a key problem. Even ifindustry members were compelled to donate an exclusive license to any insights, materials, and technologies they have patented to a common open source patent pool in exchange for a direct government grant or an indirect government grant made through a government owned corporation or public-private partnership, there is still the great expense of clinical testing usually borne by industry that can be compensated only through retention of exclusive rights in the resulting technology and the ability to charge market prices for it.
It should be noted at this juncture that that there is actually more than one model of open source methods practiced in the realm of computer software to choose from, and the definition of ‘open source’ software itself remains “very much in flux.” Unfortunately, the IGWG does not specify which model it favors to apply to the area of healthcare.
Pursuant to the General Public License (GPL) model, software authors who would otherwise possess or be entitled to exclusive private property rights (copyrights) in their expressed creations (i.e., the right to exclude others from use, reproduction and derivative works and distribution), affirmatively waive those rights, including the right to profit from them, when contributing their work to the software collective. They do so in exchange for the right to receive attribution, as a matter of contract (or license). They then leverage that resulting legal contract right to compel future creators of derivative works to waive also their otherwise exclusive private property rights.
This ensures that they, too, will not profit from their creations. As a result, the software standard remains ‘open’ indefinitely, with the effect of forcing more code into the open community. This type of restriction is referred to as a ‘copyleft,’ as opposed to a ‘copyright,’ and it serves to remove the software from the ‘public domain.’15 Experts have pointed out how the GPL model has a number of shortcomings. 16
Pursuant to the Berkeley Software Distribution License (BSD) model, businesses are permitted to “build upon free software to create proprietary software.” This means that, the BSD License allows proprietary commercial use, and the software released under the license can be incorporated intoproprietary commercial products. In addition, any works based on and/or derived from the free
14 See Lawrence A. Kogan, Brazil’s IP Opportunism Threatens U.S. Private Property Rights, supra at p.60.
15 See Lawrence A. Kogan, Brazil’s IP Opportunism Threatens U.S. Private Property Rights, supra at pp. 76-78.
16 Id., at pp. 79-80.
software may be released under its own proprietary license.17 Most companies prefer the BSD model since it preserves the legal notion of private property rights and the economic incentives underlying it.18
Paragraph 15 (4.3)(c) of the DGSPA recommends the examination of “best practices in areas such as competition, transparency and proper remuneration for patent holders”. As noted above, this recommendation engenders serious concerns. Any effort by the WHO and the IGWG to examine other additional areas outside its areas of core competencies would be perceived by national governments as unwarranted and perhaps illegal. The WHO’s constitution simply does not authorize the organization to determine competition policy and proper remuneration in the
marketplace for patent holders, irrespective of the desires of key WHO bureaucrats and nongovernmental activists.
Element 5. Management of intellectual property
Paragraph 16 within Element 5 of the DGSPA appropriately cites the “crucial need to strengthen
capacities in developing countries to manage intellectual property”. Reasonable persons can therefore agree that it is essential for developed countries to assist developing countries in expanding their technical capacity to preserve the economic and technological value of intellectual property rights within a market-enabling environment that recognizes and protects exclusive private property rights, including IP. Numerous studies have confirmed how, by establishing the proper institutional enabling environment, which includes recognition and strong protection of exclusive patents and trade secrets, emerging and developing countries may attract and shape the type and composition of foreign direct investment (FDI) that will promote their domestic industries and satisfy their national health and innovation needs.19
However, paragraph 16 also inappropriately focuses on R&D arrangements concerning nonepidemic type diseases. This is clearly beyond the scope and intent of the Doha Declaration on the TRIPS Agreement and Public Health as previously discussed, which must be taken into consideration by the IGWG.
Paragraph 17 (5.1)(a) of the DGSPA promotes “information sharing” in order to facilitate “capacity building in the management of intellectual property”. However, it does not specify how the kinds of information sharing to be undertaken would provide for confidentiality of proprietary information and data. While ‘experimental use’ agreements may be reached between and among the various parties participating in such information sharing efforts, no mention is made of this
17 Id., at pp. 80-81.
18 Id., at pp. 81-82.
19 See Lawrence A. Kogan, Rediscovering the Value of Intellectual Property Rights: How Brazil’s Recognition and Protection of Foreign IPRs Can Stimulate Domestic Innovation and Generate Economic Growth, EXECUTIVE SUMMARY at p. 9 (Sept. 2006) at: http://www.itssd.org/pdf/ITSSD-BrazilPaper-ExecSummaryI.pdf , cited in
“Intellectual Property and Growth in Global Economy – Regional and Country-Specific and Development Studies”,
Center for Strategic and International Studies website at:
http://www.csis.org/component/option,com_csis_progj/task,view/id,839 .
possibility. The logical compliment to the sharing of information between and among nations is public and private education in the recognition and protection of private intellectual property rightswhich is the charge of national governments with assistance from both the WIPO and the WTO.
Paragraph 17 (5.1)(b) suggests that the type of information to be shared includes that of patent status contained within national databases. Paragraphs 17 (5.1)(b) and (c) speak alternatively of ‘exchange of information’ and ‘dissemination of relevant information.’, but do not define these terms, which is absolutely necessary if public-private partnerships are to evolve. The IGWG must remember that any confidential or otherwise proprietary information, trade secrets and/or testing data recognized as exclusive private property under law that a government acquires from a private company for the purpose evaluating the safety or efficacy of substances submitted for pre-market authorization, should not be permitted to be exchanged with other governments pursuant to such a program without strict protection of intellectual property rights.
Paragraph 17 (5.2) calls upon national governments, “upon request” to “provid[e] support for application of the flexibilities consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights”. Yet, it does not define the term ‘support’ for such purposes. Does it entail economic, social, legal, scientific, technical, moral, etc?? This term needs to be better defined. Furthermore, as most reasonable persons knowledgeable about the public debate between universal access to healthcare and intellectual property rights are aware, there is still no international consensus concerning what specific ‘flexibilities’ are consistent with the TRIPS Agreement. It is therefore not possible at the current time for governments to provide undefined ‘support’ for that which is still unsettled under international law.
Within paragraph 17 (5.2)(a) of the DGSPA, the IGWG recommends the promotion of legislation to apply flexibilities consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights and other international agreements, by means including the dissemination of best practices.” Once again, there is no international consensus among WTO members concerning what specific ‘flexibilities’ are consistent with the WTO TRIPS Agreement. There is also a lack of international consensus regarding what are best practices’ in the exercise of such flexibilities.
Furthermore, what ‘other international agreements’ does the IGWG have in mind? Certainly, the WIPO Paris Convention does not speak to TRIPS ‘flexibilities’. Reasonable persons could easily ome to the conclusion that many national governments would find it difficult if not impossible to promote national legislation consistent with that which is unknown or unsettled in international law.
Paragraph 17 (5.2)(b) calls for the promotion of “bilateral trade agreements that do not incorporate ‘TRIPS-plus’ protections in ways that might reduce access to medicines in developing countries”.
Have not the members of the IGWG seriously considered why developed nations with robust intellectual property systems and economies that depend increasingly on the ‘sale’ and/or ‘licensing’ of ideas and innovations as a share of Gross Domestic Product seek to protect those key private assets in international markets? Do they not see how such intangible economic assets indispensably contribute to national development and economic growth? Would it not behoove the IGWG members of the CIPIH and the WHO secretariat in general to find a way to promote developing country healthcare WITHOUT compromising exclusive private intellectual property rights held by the citizens of the very nations that subsidize international healthcare?
TRIPS-plus protections incorporated in bilateral trade agreements are perhaps the only remaining mechanisms that such developed country governments can employ to protect and preserve the ‘right of exclusivity’ held by patent holder nationals for the purpose of ensuring a complete and reasonable market-rate of return to compensate for the costs, time and effort expended to discover new compounds and develop new and innovative healthcare products shipped, produced or otherwise used in bilateral trading partner jurisdictions. This is especially true currently since the WHO and certain foreign governments continue to promote a non-private property-based IP paradigm globally. Within the US, in particular, the President and the Congress have a special constitutional obligation to American citizens to protect and preserve their private property rights from actual or constructive expropriation (‘takings’ without payment of ‘just’ compensation) by government, whether that government is based in the US or abroad.20
Lastly, paragraph 17 (5.2)(c) calls for governments to “encourage trade agreements that take into account the flexibilities contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights (as recognized by the Doha Declaration on the TRIPS Agreement and Public Health). However, as noted previously, there is arguably no international consensus among WTO members concerning what specific ‘flexibilities’ are consistent with the WTO TRIPS Agreement.
If any ‘flexibilities’ are to be gleaned from the Doha Declaration, they are arguably limited in nature and scope, having been restricted to the issuance of “compulsory licenses”. As future research from the ITSSD will soon reveal, ‘compulsory licensing’ is an historical legal ‘term of art’ that is not as broad and inclusive of other mechanisms and scenarios as nongovernmental activists would have the world believe.21 Indeed, the Doha Declaration itself restricts the term flexibilities to the use of ‘compulsory licenses’ to address ‘national emergencies’, including public health crises, or ‘other circumstances of extreme urgency’, “including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics.”22 This means clearly that any reference by the IGWG to medicines or treatments for diseases other than epidemics is, by definition, beyond the scope of the Doha Declaration, and thus inconsistent with international law.
Paragraph 17 (5.3)(a) and (b) of the DGSPA aims to encourage national governments and the
IGWG explore the use of new top-down mechanisms to promote greater industry research and
development efforts and lower healthcare product prices, including prize funds utilized mostly in
the scientific and academic communities and advance-market commitments relied upon by the
increasingly centrally planned economies within Europe and arguably even in Canada. It is believe
20 See Lawrence A. Kogan, Brazil’s IP Opportunism Threatens U.S. Private Property Rights, supra at pp. 114-116.
21 See “December 12 Letter from Jamie Love to USTR on Compulsory Licensing”, Consumer Project on Technology,
at: http://www.cptech.org/ip/health/c/thailand/ustr12dec2006thailand.html .
22 See “TRIPS and Pharmaceutical Patents: Fact Sheet”, World Trade Organization website at:
http://www.wto.org/english/tratop_e/trips_e/factsheet_pharm00_e.htm ; “The Separate Doha Declaration Explained”,
World Trade Organization website at: http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm (“The TRIPS
Agreement does refer to national emergencies or other circumstances of extreme urgency in connection with compulsory licensing”) (emphasis added). that such non-market mechanisms will provide the necessary incentive for industry to invent and innovate. However, such national and regional regulatory frameworks models actually represent at-or-below-cost, fixed-price, volume-based business models that would likely be publicly supported, in some way, by national governmental subsidies or through imposition of national and/or local taxes. If ever harmonized at a global level, as implied, this might even ultimately result in the imposition of global taxes by the WHO.
Pursuant to an advance market commitment program, innovative product/service providers would essentially be guaranteed a minimal national and/or international market share in return for everyday low priced products and services. The IGWG should be well aware that this concept was previously floated before the G-8 member nations during February 2006, then considered by pharmaceutical companies as the least-worst alternative of a suite of bad options, and later rejected for sound economic and political reasons during July 2006. As the British and Japanese Governments plainly made clear, there were significant hidden costs to which they were reluctant to commit. In other words, not enough is yet known about the financial costs associated with such recommended arrangements, or about how they have impacted industries’ incentive to innovate, invest, and generate new bio and pharmaceutical discoveries that ultimately result in commercialized products that actually improve human health.
The IGWG should take note that one of the main problems surrounding the use of top-down mechanisms such as R&D credits, subsidies, and contests and awards is that they do not compensate for the opportunity (time) and economic costs incurred to convert basic R&D into commercially relevant healthcare innovations. Markets are profit-, not cost-driven. Volume-based business models with tight profit margins are an extremely risky investment in the long term, even if supported by government efforts to artificially make markets by providing advance market commitments. Since the natural tendency of markets is to fluctuate in response to the sometimes volatile supply and demand of raw materials, goods-in-process, finished products, etc., as well as, to consumer perceptions and idiosyncrasies, it would be extremely difficult to gauge in advance the true economic value of such a guarantee in terms of profitability. After all, nothing can be guaranteed forever, let alone for the extended period of time that may be required to develop, manufacture and distribute a successful life-saving drug to needy patients free of complications.
Consequently, if governments regulate company profit margins internationally and domestically without truly guaranteeing markets for more than the short-term, company and investor incentives to enter into any such arrangement are likely to evaporate very quickly.23
Lastly, paragraph 17 (5.3)(c) of the DGSPA recommends that all national governments “access the impact of data-exclusivity regulations.” As the IGWG knows all too well, in many countries trade secret information and other clinical testing data that qualify for data-exclusivity under statute are treated as exclusive private property with a temporary useful life. Such exclusivity has been proven effective in promoting discovery of new chemical entities and new uses of existing entities. Other 23 See Lawrence A. Kogan, Rediscovering the Value of Intellectual Property Rights: How Brazil’s Recognition and Protection of Foreign IPRs Can Stimulate Domestic Innovation and Generate Economic Growth, supra at pp. 304-306 and accompanying footnotes.
countries, in the meanwhile, either have enacted data exclusivity regulations but failed to enforce them, or have refused to enact data exclusivity regulations at all. In these latter cases, it is arguable that such governments truly lack an understanding of and an appreciation for the legal and economic underpinnings of data exclusivity within common law nations.24 Consequently, IGWG members who are from these latter countries are especially not qualified to render any expert opinions as to their performance and viability within third countries.25
24 Id., at pp. 144-157.
25 Arguably, the CIPIH has once again transcended WTO jurisdictional and national sovereignty lines by opining as to the ‘correct’ meaning of the WTO/TRIPS data protection/exclusivity provisions. In fact, although a plain reading of TRIPS Article 39, which falls under Section 7 of the TRIPS agreement, entitled Protection of Undisclosed Information, reveals that its objective is to prevent the commission of the tort of unfair competition by protecting proprietary intellectual property rights inherent in both undisclosed information generally (trade secrets), and in the particular types of testing data and other information generated, composed, presented and submitted to governments or governmental agencies (which may or may not include trade secrets), the WHO has denied that any such property right exists at all! See Lawrence A. Kogan, Brazil’s IP Opportunism Threatens U.S. Private Property Rights, supra at p. 59 and accompanying footnotes.