Access, Availability, and the Safety of Medicines

Ensuring equitable access, availability, and the safety of medicines is an important part of health system obligations. Equitable access includes the responsibility to ensure that pharmaceuticals are affordable for patients and that gaining access to essential medicines does not lead individuals to poverty or indebtedness. Equitable access and affordability for patients can be sought, for example, in the form of direct public financing or through different types of reimbursement or insurance arrangements. Governments can intervene to enhance affordability of medicines for individual patients. This requires political will, but is also dependent on the level of available public and private resources. Affordability has become particularly prominent in debates on access to HIV/AIDS antiretrovirals and costly cancer medicines protected by patents or other exclusivity requirements. For many of these treatments the national policy space allowing governments to intervene to increase access to and affordability of medicines is in tension with the need to provide incentives for innovation through intellectual property rights, longer exclusivity periods, and higher profits. Yet, if governments do not have the resources to buy medicines or to reimburse citizens for them, as is the case in many poorer or even middle-income countries, this incentive for research and development cannot be realized: the drugs remain unobtainable for citizens, and no additional resources flow to the industry. Further, these types of decisions are not simply commercial but also relate to broader considerations of social justice and public interests in terms of the level of pharmaceutical spending that can be sustained within societies.

The rising cost of pharmaceuticals does not concern developing countries only. For example, a recent OECD study on pharmaceutical pricing and global pharmaceutical markets explicitly noted that access to medicines is an issue in all OECD countries. Per capita spending on medicine in these states varies due to a variety of reasons, with the United States spending about twice as much ($792) as, for example, Norway ($398), Finland ($380), and the United Kingdom ($366) in 2005.Footnote 16 While in many OECD countries pharmaceutical spending remains a relatively small part of overall health expenditure, there are increasing concerns about (1) the limited clinical benefits of more expensive new products in comparison to existing treatments, and (2) new, very expensive treatments priced on the basis of “what markets can bear.” These concerns are reflected in the work of the United Kingdom's National Institute for Health and Clinical Excellence (NICE), an independent organization providing guidance to the UK government, which is generating international interest. As Sir Michael Rawlins, the chairman of NICE, noted in a published debate in the Economist on comparative effectiveness reviews, cost-benefit analyses, and medical innovation:

While global campaigns have sought to link pharmaceutical industry practices and decreased or insufficient access to medicines in the Global South, the issue of why prices are high has not featured as prominently in campaigns or debates on access to new medicines in the North. But this is changing. In discussions on the proper pricing of drugs, participants are beginning to take a closer look at the added clinical value of new medicines in comparison to existing products, especially since new medicines providing limited or no clinical value can still be substantially more expensive than older products.Footnote 18

Finally, regulatory capacity in health policy is also crucial to battling substandard medicines and counterfeiting; and in developing countries a substantial part of the problem relates to legitimate medicines that are of substandard quality.Footnote 19 From a health policy perspective, protecting patients and consumers from dangerous or ineffective medicines is a core concern, yet global efforts on counterfeiting have been geared more toward protecting trademarks and patents from infringement.Footnote 20 Meanwhile, the real regulatory challenges go unaddressed. Global health and trade policies have thus produced heated disputes both in the WHO and WTO. For instance, India and Brazil recently initiated a trade dispute at the WTO against the EU's repeated seizures of medicines, which the EU has done on the basis of alleged violations of patent or trademark laws.Footnote 21 The presence and danger of fake and substandard medicines in global markets is a real public health concern, and should be guided by ethical and global public health concerns, rather than requirements for protection of intellectual property rights.

Further, governments need to be able to regulate the quality and safety of medicines, as well as have sufficient knowledge, capacity, and time to do so. The issue of assessing safety is particularly important in light of increasing pressure to shorten the time necessary for the approval of new drugs and to maximize their reach and profit during the period of exclusivity. The pressure to expand sales quickly is exemplified by the case of Vioxx, a painkiller that had to be withdrawn from the marketplace due to serious side effects. The Vioxx case generated a controversy over the extent to which the company not only delayed action but also actively undermined safety concerns in its marketing to maintain sales.Footnote 22 It is also useful to remember the tragic lessons from thalidomide—a drug once sold on European markets but whose safety was not evaluated by independent authorities in Europe—which helped trigger an increased national and global focus on the safety of medicines.Footnote 23

Guidance on Research-and-Development Efforts on the Basis of Public Health Needs

It is now recognized that current IPR-based incentives for research and development do not ensure results relevant to diseases where profitable markets for pharmaceutical products do not exist.Footnote 24 In response, major global campaigns have been launched to promote R&D on diseases that disproportionately affect developing countries, including neglected tropical diseasesFootnote 25 (for example, Chagas disease, leishmaniasis, and dengue fever), in the context of negotiations of the Global Strategy and Plan of Action on Public Health, Innovation, and Intellectual Property Rights.Footnote 26 Both the WHO Expert Working Group on R&D Financing and the European Commission have had an interest in enhancing the financial incentives for research for neglected tropical diseases and diseases that particularly affect developing countries utilizing a strategy already used to promote R&D on “orphan drugs” (medical products for the diagnosis, prevention, and treatment of rare diseases), which require additional incentives for R&D because there are too few patients to make them profitable. However, this strategy has proved to be expensive and not effective for all types of diseases, although it is popular with the pharmaceutical industry.Footnote 27 New innovations have thus come with a high price tag. This is easier to tolerate in the case of treatments for a few very rare diseases in rich countries, but becomes much more problematic when treating tropical diseases, if the total number of diseases requiring very expensive medicines rises, or if these treatments are extended to a larger number of patients. The European Commission and the United States already consider tropical diseases eligible for designation as orphaned or rare diseases—since they are rare within the EU and the United States—which has relevance to the magnitude of new R&D that can be expected to result from this and the affordability of new (designated) products in middle-income and poor countries.Footnote 28

While intellectual property rights and exclusivity periods provide ways of rewarding innovation and investment in research and development, they do not help guide where resources are invested. For instance, despite the recognized public health need for new kinds of antibiotics, the R&D pipelines of major industry actors have been drying up due to insufficient financial incentives, partially because of the short course of treatments.Footnote 29 The field of antimicrobials also suffers from more stringent public health rules on use—due in part to concerns over microbial resistance—which limit markets and the profitability of products. On the other hand, the establishment in 2009 of an EU-U.S. task force to address antibiotic resistance, prevention of drug-resistant infections, and strategies for improving the pipeline for new antimicrobial drugs is a reflection of the growing importance of the issue in “high” politics.Footnote 30

The emerging cracks in the current incentive system for R&D in diseases that disproportionately affect developing countries, rare diseases, and antibiotics pose an important question: Are the problems in the current system such that they may be patched with greater public funds and incentives, thus further entrenching the current strategy, or should more fundamental questions regarding the current driving forces for R&D be raised? In light of current failures to respond to the health needs of large populations, it is necessary to keep an open mind toward a variety of potential options that could enhance and guide R&D, including, for example, strengthening traditionally publicly-funded research institutions while encouraging open or adjusted licensing for pharmaceuticals to ensure access to knowledge and the affordability of medicines. The fact that there are alternatives should thus be kept in mind, especially because of commercial interests in further enhancing the current system of incentives, which may pose very high costs to consumers. Some of these desired enhancements include the use of transferable benefits to companies as a reward for new products in desired areas of research, such as priority review vouchers or patent “wild cards,” which would allow shifting the benefit of early review or patent extension to another, more profitable drug.Footnote 31

In a market-driven context of R&D, investments are made on the basis of commercial prospects, which are not necessarily the same as health or health policy needs. For example, while research and product development focusing on enhancing the capacities of healthy people, such as performance-enhancement drugs, might be a lucrative commercial strategy, it is not what is necessary from a health policy perspective. Through the high prices of medicines, we also subsidize other activities that do not relate to research, are unnecessary, or may not support health policy priorities: in the commercial sector, marketing and advertising costs are often of equal magnitude—if not far greater—than direct research costs, and must also be built into the price of medicines or research processes. The concerns over ethics, quality, and conflicts of interest with respect to the commercialization of clinical trials represent another failure of the market-driven research-and-development environment. We also see inappropriate practices, such as the use of phase IV clinical trials—initially aimed to serve as a means to provide scientific evidence on the efficacy and safety of a licensed drug—to serve marketing priorities as “seeding trials” intended to engage key professionals and to promote their prescribing of the product.Footnote 32

The OECD's analysis of global pharmaceutical markets has emphasized that despite rising R&D costs, most innovation has been incremental, with little or no added therapeutic value.Footnote 33 Although questions have been raised about the calculations of R&D costs, the industry's low productivity has also been directly or indirectly recognized in recent assessments.Footnote 34 There is, therefore, a common health policy interest across governments to ensure that public support for R&D enables access to knowledge, provides added therapeutic value, contributes to health policy priorities, does not waste public resources, and focuses on areas where new innovations are essential. It is also a common health policy concern to ensure that national, regional, or global support for global R&D efforts on diseases that disproportionately affect developing countries is based on the wise use of resources, does not end up merely as public subsidies for private companies, and that research is not doubly funded—first through increasing direct support for R&D, and then through higher prices of medicines as a result of intellectual property rights and the application of market exclusivity through data exclusivity provisions.

National Policy Space for Health and Pharmaceutical Policies

One of the main goals of national health and pharmaceutical policies is to ensure that citizens have access to affordable medicines. However, the scope of policy measures that governments can apply within the health sector is often limited by commitments made as part of trade agreements. Compliance with TRIPS under the auspices of the WTO (and, often more important, with further provisions in bilateral or regional trade and investment agreements) are increasingly seen as a condition for attracting foreign investment and the means for the “modernization” of a country's economy. Bilateral and regional trade and investment agreements have directly addressed pharmaceutical policy issues through the inclusion of requirements exceeding TRIPS (so-called TRIPS+ measures), which extend exclusivity periods. Such measures are present in recent agreements between the United States and various developing, middle-income, and high-income countries (for example, CAFTA with Central American countries, as well as bilateral agreements with Australia, Jordan, Singapore, and Vietnam). They have also appeared in trade agreements between the European Union and its trading partners, and are currently part of the negotiations of a free-trade agreement with India.Footnote 35

Pharmaceutical matters have also been dealt with in bilateral agreements between wealthy countries. The United States–Australia Free Trade Agreement is a good example of how the regulatory context of pharmaceutical policies, including the pharmaceutical benefit scheme that establishes the basis on which pharmaceuticals are subsidized to patients, can become part of trade negotiations, with the inevitable movement away from the public good and toward a more private rights–oriented system better attuned to private investment and profit making.Footnote 36 In the Australian example, enhanced intellectual property protections were cast as policies designed to strengthen competitiveness and innovation, shifting regulatory support more toward private investments, and emphasizing commercial and private rights. According to this reasoning, which has become commonplace in commercial policy and trade negotiations, countries or institutions that refuse to pay sufficient margins for innovative pharmaceuticals are accused of being “against innovation” and of “not playing by the rules” by limiting market access for highly priced innovative products.

Moreover, legitimate policy measures to contain the costs of pharmaceuticals are often considered to be in conflict with trade policies, even if the intellectual property rights regime complies with TRIPS. This is a problematic view, not least because it privileges pharmaceutical company profits over affordable access to drugs. The Office of the United States Trade Representative (USTR), for example, issues an annual Special 301 Report, which examines the adequacy and effectiveness of U.S. trading partners' protection of intellectual property rights. The report lists problem countries in the categories of “priority watch,” “watch,” and “Section 306 monitoring list,” and provides a means for the United States to communicate its concerns about the need to protect and enforce intellectual property rights and to “fight IPR theft in overseas markets.”Footnote 37 These reports have also examined national pharmaceutical policies, such as reference pricing and price controls of pharmaceuticals, as a trade-related matter.Footnote 38 The Special 301 Report in 2006 clearly articulated, under the heading “Supporting Pharmaceutical Innovation,” that:

The Special 301 reports do not apply to poor or middle-income countries only. The pharmaceutical policies of several European countries have come under scrutiny in the context of their trade relations with the United States. For example, Norway is on the U.S. 301 watch list due to its national pharmaceutical policies and alleged lack of sufficient patent protection.Footnote 40 In April 2009, Finland appeared on the U.S. 301 watch list with a similar reference to pharmaceutical policies, and remains on the list in 2010.Footnote 41 When considering the legislation that eventually contributed to the Finnish listing, the Finnish government had been pressured by the pharmaceutical industry by the threat of inclusion on the list if it were to go forward with its proposed policiesFootnote 42; and in the parliamentary hearing the statement of the foreign affairs committee drew attention to the ways such a listing could result in major economic consequences and hurt the Finnish reputation in innovation, potentially discouraging foreign investments in research-and-development activities in Finland.Footnote 43 It is important to note that the Finnish national legislation remained compatible with European and international law. Thus, the Finnish example is worrying not only because it shows how expectations extend beyond legally defined margins in international trade agreements, but also because it makes evident the lobbying powers of a multinational industry and how this influence is reflected in pressure from stronger ministries, such as trade, foreign affairs, or industry, in national policy-making. (To date, the initial Finnish legislation has not been changed or challenged, possibly because it has resulted in an overall savings of €109 million in government reimbursements of medicines during the first year of operation.Footnote 44)

To sum up, ministries of health across the world are likely to have common interests in pharmaceutical policies that are not equal to and are often in conflict with global pharmaceutical industry interests—particularly because they are often the main payers of the costs of medicines and are accountable for health policies, including the safety and appropriate use of pharmaceuticals, within countries. On the other hand, pharmaceutical industry interests are increasingly articulated as part of broader policies intending to enhance competitiveness and innovation. This leads to increasing tensions between governments' objectives.

The imperative of separating corporate and public interests also applies to broader public health measures, such as vaccination programs that are paid for by public funds.Footnote 45 In June 2010 the British Medical Journal published an analysis that pointed to conflicts of interests with respect to scientists advising the WHO in the context of pandemic influenza. The analysis included concerns over the role of a 100 percent industry-funded European Scientific Working Group on Influenza, as well as inconsistencies with respect to how conflicts of interests were dealt within the WHO, concluding that “there is a danger of credibility of the WHO and the trust in the global public health system.” While the WHO has recognized the need “to establish, and enforce, stricter rules of engagement with industry,” it has strongly maintained that “accusations that WHO changed its definition of a pandemic in order to accommodate a less severe event (and thus benefit industry) are not supported by the facts.”Footnote 46

Finally, focusing only on the role of global or bilateral trade agreements and negotiations may be insufficient where differences in policy priorities between industrial and health policies at the national level are significant. Innovation policies are increasingly considered a necessary requirement for competitiveness in the global economy. The emphasis on innovation policies as a key element in industrial policy contributes to establishing IPRs as a national priority for the ministries of trade and industry, while at the same time ignoring the resultant resource or policy space constraints that affect ministries of health. Policies and priorities set within governments in support of innovation can and have been used, for example, in Australia, more directly as a means to question or contest health policy measures, such as price controls and other means to lower the prices of pharmaceuticals.Footnote 47