Healthy Living

Blatant Manipulation: Overpricing Essential Medicines

The scenario of over-priced drugs is so common, you’d think compulsory licenses would be fairly standard.

When I caught sight of the recent news that Germany’s patent court had granted a compulsory license for the manufacturing of a HIV drug, I celebrated.

A compulsory license is a legal tool at governments’ disposal (included in national laws and authorized by international agreements and treaties). It allows them to suspend patent protection on a specific medicine and authorize someone other than the patent owner to produce a generic version of a medicine to address a public health problem. It makes essential, expensive medicines more affordable.

The scenario of over-priced drugs is so common, you’d think compulsory licenses would be fairly standard. The case of Gilead charging between $4 and $1,000 a day for the same medicine depending on the country it’s marketing to is well-known. Unfortunately, compulsory licenses are rarely used to address such abuses.

Pressure and lies

When a compulsory license is granted, cheaper versions of the same medicines can be manufactured. This threatens the originator company’s profits and pressure, lies, and expensive lawyers follow. This has become so mainstream that a UN report released this month describes the pressures and tactics of governments and companies to undermine the use of public health safeguards including compulsory licenses. The report states, “undue political and economic pressures have been used to dissuade governments from using [safeguards] that could protect public health … Such actions undermine the efforts of governments to meet their human rights obligations as well as their inalienable duty to protect health.”

An extreme example of profits before purpose was when Abbott Laboratories (now AbbVie) declared that it was withholding all new medicines from Thailand. This was a reaction to the Thai Ministry of Public Health’s announcement that it would issue compulsory licenses for use on a number of over-priced medicines, including for Abbott’s lopinavir-ritonavir, a second-line antiretroviral medicine.

Due to the lengths companies will go to protect their profits, you’ll be getting the gist that compulsory licenses are a rarity. It also turns out that my celebration from the reports of Germany granting one was premature.

Unabated profits

The news available indicates that this compulsory license in Germany was applied for by a pharmaceutical (Merck US) so it could use a patent registered by another pharmaceutical (Shionogi) in order that Merck can continue producing raltegravir, a drug used for HIV treatment.

Raltegravir is desperately needed to treat HIV patients who are experiencing treatment failure, but Merck’s extreme high pricing means it is out of reach for several low- and middle-income countries. Merck’s compulsory license looks like a manipulation of a tool intended for the benefit of public health. While Merck can argue that its continued production of raltegravir means more people can access medicines it allows the company to continue its profitable business unabated.

Compulsory licenses are meant to challenge monopolies, not cement them. Price hikes enabled by monopolies are a key factor as to why medicines are out of reach for too many people in need of them globally, so if upheld, this license sets a very dangerous precedent.

Price-hike pen

The price hike hitting the headlines at the moment is that of Mylan, the producers of EpiPen. The company’s +400 percent price hike since 2009 is so extreme that it’s currently under scrutiny by a U.S. Congress committee.

The committee accused the company of getting “filthy rich at the expense of our constituents.” EpiPen is a device that injects a life-saving dose of epinephrine when someone experiences an otherwise fatal allergic reaction. It costs families, schools, etc. $600 for a pack of two compared to $100 back in 2009. Its CEO, Heather Bresch, who continues to face Congress this week, doubled her income from $9 million when she took over as CEO in 2012, to $18 million last year. She insisted that Mylan’s gains haven’t been outrageous and indicated to Congress that there is no plan to lower the price.

Backing down

When faced with an unabashed sense of entitlement for extraordinary profits on life-saving drugs it can seem difficult to challenge. But success is possible. Although Mylan might not back down, I doubt it will continue to draw in the same profits on EpiPen once the committee’s investigation is over.

Another event this month, involving the same company that applied for the license in Germany, saw MSD Ukraine agree to drop their patent protection of a HIV drug marketed as Atripla (Merck is known as MSD outside the U.S. and Canada). The All-Ukrainian Network of People Living with HIV/AIDS had repeatedly urged the company to drop the patent as the current prices meant a “ruinous situation” for the State HIV Treatment Program. The result follows the network’s lobbying, which may have otherwise resulted in a compulsory license or a patent opposition which would have suited MSD less. Nonetheless, it’s a success; it means the price of the drug should soon drop to half or a third of the price making it possible to treat almost an additional 3,000 people per year.

Disappointingly, proposals calling for a more systematic use of compulsory licenses or exclusion from patentability for essential medicines were rejected by the UN’s report. This means it remains vital for civil society to carry out critical legal work advocating for the use of public health safeguards and challenging abusive patents.