Statement made on 23 April 2009 by Senator Yoine Goldstein (retired)
Hon. Yoine Goldstein:
Honourable senators, in 2003 member countries of the World Trade Organization agreed on what they said would be a quick solution to the problems faced by developing countries in obtaining access to lower-cost, generic versions of medicines desperately needed by their people to overcome devastating epidemics.
Canada was among the first countries in the world to amend its patent laws based on that agreement, entitled Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, creating what is now known as Canada's Access to Medicines Regime.
The bill was adopted by Parliament with the support of every single member in the other place and every single senator. It was one way in which Canada pledged to help developing countries disproportionally burdened by the terrible toll of AIDS, tuberculosis, malaria and other public health problems. It was a commendable initiative.
Years have passed and it is clear that neither Canada's law, nor the similar laws passed by a few other countries, offer the sustainable solution that was promised. Theoretically, Canada's Access to Medicines Regime allows the exclusivity of Canadian drug patents to be overridden for the limited purpose of allowing an equivalent generic version of that drug to be exported to those developing countries listed in the statute. However, in practice, the current system simply does not work for the listed developing countries, for the beneficiaries who need to purchase these more affordable medicines or for the Canadian generic manufacturers who are the potential suppliers of these medicines. As many critics have underlined, CAMR in its present form is fraught with unnecessary administrative hurdles and cannot meaningfully achieve its humanitarian objectives.
CAMR has not only failed to provide the generic pharmaceutical market and interested countries with sufficient incentives to warrant using the system; it is inaccurately assumed that developing country governments have the knowledge and resources to take advantage of our compulsory licensing policy. For instance, in a country like Tanzania, there is only one person in the entire country working on international intellectual property. This makes the use of the compulsory licensing procedures to supply medications to those who most need them an actual impossibility.
It is not surprising that in the five years since Parliament made this pledge and unanimously passed this law, a rare occurrence indeed, CAMR has been used only once to supply a single AIDS drug to a single country, Rwanda. This came about only after years of work by NGOs and by one generic manufacturer, Apotex; yet, the government still maintains that it is premature to amend CAMR.
Clearly, CAMR is not the simple, rapid mechanism for responding to the health problems of developing countries that is needed and that was promised. Countries in crisis situations will not opt to deal with cumbersome procedural requirements. That is why there is little reason to expect that CAMR will be used again, as most of the key stakeholders have gone publicly on record to shun this legislation. Indeed, even our Standing Committee on Foreign Affairs and International Trade, in its February 2007 report entitled Overcoming 40 Years of Failure: A New Road for Sub-Saharan Africa has acknowledged the regime's failure.
Honourable senators, what can we do to fix CAMR if we accept the principle, as our predecessors did and as, surely, we do?
Bill S-232 greatly simplifies the compulsory licensing authorization process by exploiting numerous flexibilities available under the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights, familiarly known as TRIPS. It brings forward concrete solutions to many shortcomings identified by a wide range of experts in the field while still taking into account the legitimate interests of Canada's pharmaceutical industry.
As a result, Bill S-232 eliminates most counterproductive restrictions going above and beyond what is required by the WTO paragraph 6 decision, and which are currently hindering the efficacy of the regime.
With Bill S-232, generic manufacturers would be able to obtain a single, open-ended compulsory licence that authorizes the export of any pharmaceutical product patented in Canada to any eligible country specified in the legislation, without prior negotiations with patent holders and without the restriction of determining the quantity of the drug that will be needed in a given time period.
Currently under CAMR, developing countries and generic manufacturers must undertake a cumbersome application process consisting of a country-by-country, order-by-order mechanism that relies on pre-determined, fixed quantities of medication with a finite contractual time limit of two years, subject to a single additional two-year renewal period after which all contracts must be renegotiated.
People who are afflicted with AIDS need help for more than two years; they need help for the rest of their lives.
Also, the applicant is obliged to certify that, at least 30 days before applying for a compulsory licence, he sought a voluntary licence from one or many patent holders on "reasonable terms and conditions" and to prove that these efforts were "unsuccessful," which is a highly expensive, potentially protracted and rarely successful venture for generic drug manufacturers.
Given the heavy front-end investment demanded from generic companies, these limits introduce costly uncertainty into the application process and do not provide any prospect for a large or long-term market, giving these companies little incentive to engage in this approval-seeking mechanism. In fact, if at any point the importing country or generic manufacturer wishes to alter the agreement, increase the quantity of the medication, or extend the contract, they must start the application procedure all over again, including an attempt to negotiate a voluntary licence with the patent holder.
This is unacceptable and is obviously a major drawback for firms that need to undertake the considerable scientific, legal and political steps necessary to acquire the capacities and rights to produce and export drugs and fiercely compete at the same time against Brazilian or Indian generic manufacturers.
For diseases like AIDS, which require long-term treatment and a continuous supply of medication far beyond a two- or four-year term, we can see how terribly out of sync CAMR is from the health and economic priorities of developing nations.
Honourable senators, Bill S-232 proposes to eliminate the limited list of products that can be made in generic form for export through compulsory licensing. The current list of products set out in Schedule 1 in Canada's Patent Act represents a step back from the international consensus achieved with the WTO decision that does not limit which drugs qualify for a compulsory licence. No other country that has amended its patent laws to implement the WTO's directives has included a limiting provision like Schedule 1.
The new definitions of "pharmaceutical product" and "patented product" are worded as clearly and inclusively as possible so as to avoid any misinterpretation or any potential litigation by a patentee seeking to block use of the regime to produce a pharmaceutical product for export under compulsory licence.
Developing country representatives are interested in affordable second- and third-line antiretroviral therapies, many of which do not even appear on CAMR's limited list of available drugs. Accordingly, Schedule 1 would be abolished since it hinders Canada from being able to respond quickly to the needs of developing countries.
Additionally, Bill S-232 makes it easier for NGOs to purchase Canadian-made generics by eliminating the requirement that they obtain the permission of the importing country government. Requiring an extra permission for reputable NGOs, such as Médecins sans Frontières and others, to do their work is not required by any WTO rule and creates an additional, unnecessary barrier to patients getting the medicines they need. As long as the medicine satisfies the conditions established by the drug regulatory authority in the importing country, there is no reason a non-governmental purchaser of Canadian-made generics importing those products into an eligible country should require the permission of the importing country's government before purchasing supplies.
Another feature of Bill S-232 is that it accepts alternatives to Health Canada approval of a generic product, such as pre-qualification by the World Health Organization, as a precondition to exporting the product. Since many developing countries will require pre-qualification by the World Health Organization of the generic product in question before purchasing it, requiring Health Canada approval of the generic manufacturer's product as an absolute precondition before the manufacturer can get a licence to manufacture for export can lead to duplication of efforts and add unnecessary delays.
As opposed to the current regime, Bill S-232 would also treat non-WTO developing countries fairly by eliminating the additional requirements for becoming eligible to import Canadian-made generics, such as declaring a national emergency or pledging that CAMR will not be used for commercial purposes, restrictions that do not apply to developing countries that belong to the WTO. Patients' access to more affordable medicines should not depend on whether their country belongs to the WTO.
Finally, under the Patent Act as it currently stands, the Commissioner of Patents may not issue a compulsory licence unless the applicant has provided to the patentee, for a period of at least 30 days, not only the name and quantity of the pharmaceutical product to be exported but also the name of the country or WTO member to which the pharmaceutical product is to be exported.
As a result, for at least a month, before there is even any assurance for the would-be purchasing country that a Canadian generic supplier is able to legally supply the product for which a tentative agreement has been reached, the importing country is exposed to almost certain pressures from various actors — which I leave to your imagination — to refrain from proceeding with the use of compulsory licensing to secure needed medicines. Recent history in these matters provides numerous examples of this kind of pressure, extending from threats of serious trade sanctions to commercial retaliation.
That is one factor which has certainly contributed to the fact that only Rwanda has notified the WTO of its intention to import generics from jurisdictions that have implemented compulsory licensing regimes. With Bill S-232, there would be no need to reveal the name of a would-be developing country purchaser.
Regarding this point of identity, Canada's pharmaceutical industry often cites the risk of diversion of generic medication as an utmost concern when discussing compulsory licensing for humanitarian purposes. These are legitimate fears that must be addressed even if there is, in fact, no evidence of diversion ever occurring, or little evidence, in any event. Therefore, under this procedure, on top of paying the applicable royalty rate pursuant to the existing regime formula, generic manufacturers would still be required, following receipt of the licence, to establish a website disclosing the name of the product, the name of the country to which it is to be exported and providing the distinguishing features of the product, its label, its packaging, all to preclude its re-exportation.
It is important to emphasize that integrating international public health objectives into national patent regimes is entirely legal under the TRIPs agreement; in fact, it is required by the Doha declaration on public health.
Honourable senators, by streamlining CAMR, Bill S-232 does not imply an outright rejection of medical patents, nor does it contend that all essential medicines should be free from patent protection. Bill S-232 simply strives to reconcile the different needs of the rich and the poor for a balanced and a fair intellectual property regime, promoting equitable access in times of crisis. Consequently, when patent medicines are not affordable, governments such as ours must step in to correct the private market and protect a fundamental human right — the right to health.
Drug prices is not the only relevant issue, as many developed nations and transnational pharmaceutical firms have argued. Other necessary foundations for sustainable access and treatment must also be present for developing countries to produce, one day, their own medicines and not rely on external supply. However, if drugs are not available, treatment and local industry growth are impossible. For developing countries operating with scarce resources, the high price of drugs can serve as a disincentive to invest in the development of the health care infrastructure that is essential for development and self-reliance. When drugs are affordable, by contrast, improving health care infrastructure may appear as a more worthwhile task, especially when developing nations spend as much as 70 per cent of their health care budgets on medication, while developed nations spend less than 15 per cent of theirs on medication.
Men, women and children — especially, and unfortunately, children — continue to die needlessly without access to medicines that can be provided for as little as a few cents per tablet with absolutely no impact on drug innovation, research or job creation in Canada. Pharmaceutical companies based in the OECD recover the bulk of their research and development expenditures in the more affluent OECD markets, which account for 80 or 90 per cent of global sales of patented medications. Hence, the use of compulsory licences by developing countries is unlikely to have a material effect on the corporate balance sheet or on the level of research currently undertaken in the OECD, as long as inexpensive, generic drugs are not redirected into wealthier markets.
The challenges of facilitating effective and sustainable AIDS treatment in the developing world are daunting, but they are not out of our reach. Generic manufacturer Apotex has committed to produce a version of a key AIDS medication that is suitable for children, which could be exported to multiple developing countries if the licensing process of CAMR is streamlined and simplified.
In sub-Saharan Africa, a region accounting for two thirds of all people living with AIDS, half of all children born with HIV die before reaching their second birthday. Where medicines are available for these children, the death toll is dramatically reduced.
Honourable senators, Canada has a golden opportunity to deliver life-saving drugs to those in need, first and foremost by giving life to Bill S-232 so that CAMR can finally live up to its expectations by becoming a sustainable tool of sickness prevention and treatment when it is most needed. Children in sub-Saharan Africa deserve nothing less. Surely, we have an obligation to do no less.
Honourable senators, Canadian pharmaceutical manufacturers will not be any worse off. They will collect reasonable royalties to cover the costs of research and development in which they have invested. No Canadian will be deprived of the pharmaceutical products that he or she needs. No Canadian interest will be adversely affected in any way. If we horde these drugs only for ourselves, then what and who are we? If we do not do something now, then when?