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© Karl Simpson
Responsibility, patents and the life sciences
Introduction
Patents allow industry to invest in research which generates novel products to the benefit of society. Patents allow inventors to benefit from a monopoly position during the roughly 20 years of patent life. Patents are a formalised system for disclosing proprietary information. By itself, a patent does not give any right to exploit the information alluded to. The right to exploit a patented invention is conferred by the appropriate legal framework.
Inventors have the right to license-out rights to exploit their genius. Thus an individual inventor or small company might license rights to a household name company. The inventor holds the patent, but the licensee or licensees hold rights to exploitation.
In this article we are not looking at the patentability of life forms or genes, but at the issue of responsible exploitation of monopolies conferred by patents.
Recent concerns about fair access to life-saving medicines are shared by many. Although I strongly support the temporary monopoly conferred by the patenting of novel pharmaceutical processes and products, I believe that this monopoly must be exploited in a manner which is ethically acceptable. I believe that the current legal framework for exploitation should be re-examined. Patents are not in question. It is the fair and ethical exploitation of a legalised monopoly position that is in question.
In the past few years the AIDS epidemic in particular has brought this issue to the fore. It is not a simple issue, for even if we get the drugs to the patient, how are we to assure appropriate dosing and compliance? Some thoughts on the issue of access to patent medications are conveyed in a previous article "Pharmaceuticals for the developing world - some sense?". Clearly in many parts of the world, the very real need for AIDS medications is not being answered - and arguably, respect for international patent conventions is playing a part in restricting access to such medications.
In the life sciences sector, the legal protections associated with the patent system have allowed pharmaceutical companies to make major strides in developing novel medications based upon ever deeper understanding of human physiology and biochemistry. The monopoly position conferred by holding a patent, or having a license to exploit a patent, is very important. It means that a pharmaceutical company can invest hundreds of millions of Euros in the knowledge that if an effective product sees the light of day, that product will be without direct competition in the market place. That is, no other company (without a license) has the legal right to exploit the invention. In an increasingly global economy, international treaties and conventions assure inventors of a global monopoly - in such nations as are signatories to treaties and conventions. Inventors must of course pay for the right to extend their initial (national) patent position to other national or regional patent regimes.
As was discussed in the previous article (20/27 February 2001) it costs a great deal of money to carry our laboratory research, and even more to carry-out clinical trials in human beings. The total cost of bringing a new drug to market is of the order of Euro 200 to 500 million. The costs of developing such a drug will be primarily recovered during the period of monopoly exploitation. However, it takes roughly ten years to move from patent deposition to registration of an approved drug. That means something like 7-10 years remains in which to cover the costs of drug development.
The price charged for a patent medication is not arbitrary. It reflects a number of factors:
if an expensive drug produces an overall reduction in treatment cost, through shortened hospital stays, or rapid return to productivity, a high price can be justified.
So far so good! However, by and large the companies that develop patent pharmaceutical products are located in the developed world, where sophisticated economies have assured citizens of access to medications. Industry has a tacit contract with society - in the developed world - to supply medications to those who can afford to pay (through insurance premiums or social security payments). It would be wrong - and in most places illegal - for the custodians of shareholders' faith to do other than obtain a maximum return on investment made - within the framework of existing legislation.
It is reassuring to see that some countries in the developing world are now recognising the importance of R&D.
A responsible public sector?
It must not be overlooked that much of the intellectual property exploited by the pharmaceutical industry comes from public sector research. Universities and hospitals are increasingly developing technology transfer structures which permit them to augment budgets with license fees. This follows upon government policy which insists that such public sector bodies generate income. There is indeed a worrying trend for governments to see public works as an extension of Government Ltd., Inc. SA., NV, AG etc.. So why does the public not get the direct benefits. Government will answer that there are direct benefits: lower taxes, cheaper medical care, lower social security costs etc..
I would argue that there is a clear case for the licensing and exploitation of patents based on work carried out by government employees to be re-examined. Yes such work should be patented. Yes, such work must be licensed to pharmaceutical companies which can exploit it efficiently.
But!! As taxpayers we must insist that conditions are attached to licenses to exploit such patents. Foremost among these conditions should be an obligation to make available patent medicines - at cost - to citizens who have no means to pay. This imposes reciprocal obligations on government.
The international community of sovereign nations must recognise that part of the taxation burden must be used to protect citizens in the developing world. This is not philanthropy but common sense.
The globalisation of the economy has built in positive feedback. The existence of international organisations, such as the World Health Organization or the GATT suggests mechanisms for providing a legal framework for common sense.
A responsible industry?
Is industry responsible for providing medicines to those who cannot afford to pay? This is a real question which should be challenging students of medicine and biological science. And in particular it should challenge political decision makers responsible for pricing accords with industry. How can industry afford to demonstrate philanthropy? Should part of the deal be that we rich citizens pay more for medication so that poor citizens can receive them at an affordable price (where affordable might mean for free!).
Unless obliged to do otherwise by regulations, private companies have an absolutely clear mandate to generate earnings for shareholders. This obligation is a fundamental tenet of capitalist practice.
In recent weeks a hot debate has broken out on the ethics of disease treatment in the developing world. Is it right that citizens of South Africa cannot have access to life saving anti-HIV medications, simply because they are poor?
How can the patent system offer access to essential drugs for those who do not have the means?
The patent system cannot offer such access. The patent system, as stated earlier is a formalised system for disclosing information. A patent allows the holder of that payment to be free from the competition of commercial imitation for the lifetime of the patent.
Industry in general shows a surprisingly high level of ethical concern. This is because shareholders recognise that it is in their interests to adopt ethical standards.
Medicines, biotechnology and the developing world
If every village in the world had a helicopter and a paramedic team and access to a modern hospital, the number of deaths from accidents would be dramatically reduced. If every life-saving drug were produced in quantity sufficient for all, deaths would likewise diminish.
And of course we all know that the above scenarios are ridiculous. It is beyond the means of even the most developed societies to offer such services - except where a financial base exists to justify that service; ski resorts and cities in rich nations for example.
In the developing world the parlous state of many economies encourages fraud. Most disturbingly, medicines donated - or sold at cost - to developing countries by international organisations, sovereign governments, private philanthropists and companies, are often stolen and sold at a high price on the black market - or re-exported by corrupt government employees. To dissimulate such crime, original or counterfeit packages are used to pack counterfeit medicines. Not only are such medicines without therapeutic effect, they are positively dangerous, for any application of sterile practice is avoided. Injection of counterfeit medicines may lead to infection and death.
Without strong international policing of such fraudulent practice, it is difficult to see how companies can avoid their charitable sentiments being used against their own competitiveness. If grey imports to the UK where originally donated to an African nation companies are placed in real difficulty. Not only is the UK market undermined, but accusations of intoxication and the export of sub-standard products to Africa can lead to investigations by regulatory authorities and a loss of confidence in excellent products.
What is a human life worth?
Patents allow the development of expensive medications. Eventually, as patents expire, everyone will have access to those medications at the lowest price compatible with competitive manufacturing.
The current furore surrounding access to HIV medications is instructive, but it should not blind us to the fact that even generic medicines - in the absolute - are expensive for those who have no money to pay.
For countless millions in the developing world there is simply no relief to other chronic illnesses such as haemophilia, arthritis, parasitic infections etc. etc. etc.. In the meantime we must ask - what is a human life worth? Who pays? The answer to this question is not philosophical. In each developed nation actuaries ponder this issue and decide how much should be spent on safety advances in aviation, road safety, railway systems etc. The same considerations apply to health-care. How much is it reasonable to spend on saving lives? In the fields of commercial transport it seems that a life is valued at about Euro 2-5 million. That is if an innovation in aviation or rail safety will save 100 lives a year, expenditure of Euro 200 to 500 million can probably be justified. This does not correspond to pay-outs by insurance companies.
The social security and insurance systems in the USA and Europe can afford to spend hundreds of thousands of dollars or Euros on maintaining life for AIDS sufferers, as well as haemophiliacs and many others beset by chronic illness. In Europe, the total cost of 10 years medical care for an HIV infected person is probably of the order of Euro 2.5 million.
Even taking into account lower salaries and infrastructure costs, a ten year treatment regime, based on generic drugs, in Africa, cannot realistically be expected to cost less than Euro 0.25 million. That is simply too much. And what of other chronic illnesses that cause a phenomenal burden of human suffering?
Patents oil the motor of health-care development
Given that industry is the motor of health-care development, it cannot hope to sustain its competitiveness, its markets, its very future - and consequently the standards of health to which we have all become accustomed - unless it continues to enjoy a short to mid-term monopoly on the exploitation of developments. Such a monopoly is conferred by patent protection and other forms of industrial intellectual property. On expiry of patent lifetime competition will emerge, and indeed most medicines on the market today are not currently "in patent".
Patents become an issue when new research offers answers to diseases that cause major suffering and economic damage - such as AIDS, such as tuberculosis, such as malaria, such as diarrhoea (from many causes). Many other diseases cause suffering and economic harm on an only slightly smaller scale, measles, arthritis, vitamin A deficiency, schistosomiasis, haemophilia, sleeping sickness.
Research into too many of the diseases referred to above is inadequately financed. The incidence of diabetes in the developing world is not clear. Almost no one in the developing world receives any sustained treatment for haemophilia!
Patents are not the issue. Ethics are the issue.
The level playing field
We are close to being able to tackle these issues. Many global infrastructures exist. These regulate issues ranging from, chemical weapons deployment, to the global elimination of infectious disease (smallpox and polio), to tariffs on cross frontier trading, to scientific and educational collaboration, to international crime. The United Nations Organization is becoming increasingly empowered to judge issues of national sovereignty.
Regional accords, such as those embodied in the European Union, make demands on signatories that member States forgo some sovereign rights. Inspection regimes built into international treaties such as the Chemical Weapons Convention permit clearly defined suppression of sovereign rights.
Observations and recommendations