Ecuador’s authorization of generic HIV/AIDS drug applauded by US consumer watchdog, calling for others to follow

April 26, 2010

Ecuador’s patent office issued a “compulsory license” for lopinavir/ritonavir, an important HIV/AIDS medicine. The license authorizes generic competition with the patented drug. While the patented version, sold under the trade name Kaletra by US health care major Abbott Laboratories, costs Ecuador’s public sector roughly $1,000 per person per year, Ecuador will soon be able to access generics at half that, noted the consumer group.By opening the door to competition from generic drugmakers, Ecuador is making a critical HIV/AIDS drug much more affordable for that country’s public treatment programs - a move that other countries should follow, the US consumer watchdog Public Citizen has declared.

“Ecuador is setting an example for countries that seek to expand access to lifesaving medicines, but struggle to pay for ever-more expensive drugs,” said Peter Maybarduk, director of Public Citizen’s new Access to Medicines Program. “Competition has consistently proven the most effective way to lower the prices of medicines. Countries should count compulsory licensing among their essential public health policy tools,” he argued.

Compulsory licenses authorize the use of patented technology under enumerated conditions. They do not eliminate or override patents, and the patent holder - in this case, Illinois-based Abbott - will receive royalties. Many countries have used such licenses to promote public interest objectives and to remedy anti-competitive practices in a variety of sectors. In recent years, a number of countries have issued compulsory licenses to improve access to medicines, including Thailand, Brazil, Malaysia, Eritrea, Mozambique and Indonesia, among others.

The USA is perhaps the world’s most frequent user of compulsory licensing, including the government use of defense technologies, and judicially issued licenses to remedy anti-competitive practices in information technology and biotechnology, among other instances, Public Citizen alleged..

Action cuts price of the drug by 27%

Ecuador’s compulsory license immediately reduced the cost of a major public HIV drug purchase last week by 27%. Prices are expected to drop much further soon, as Ecuador licenses more competitors to enter the market. Ecuador laid the groundwork for the license last fall, when President Rafael Correa declared access to priority medicines to be a matter of public interest.

More recently, the country's Intellectual Property Institute issued an Instruction on the Granting of Compulsory Licences for Patented Drugs, in accordance with local IP legislation and is open to receive applications for the grant of compulsory licences, whether for commercial or non-commercial public use. It is for the applicant to show that the product or medicine which it will produce or import is primarily intended for supply within the domestic market. In the case of an application for commercial public use, the applicant must show that it tried to obtain authorization from the rights holder on "commercially reasonable terms and conditions" and that a favorable response was not obtained within a period of 45 days.

Generics have cut price of ARVs from $10,000 to $100 a year

Over the past 10 years, generic competition has produced a revolution in HIV/AIDS treatment, reducing prices for first-line antiretroviral medications from about $10,000 per year to about $100 per year and enabling more than four million people worldwide to access treatment. But high prices continue to limit access to the patented second-line medicines that many people living with HIV need, including lopinavir/ritonavir.

A UNAIDS 2008 country report estimated that 42% of Ecuadoreans needing antiretroviral therapy received it. Ecuador’s national HIV/AIDS treatment program will expand public access to treatment this year, aided by savings from the compulsory license, said Public Citizen.

Compulsory licensing is an integral component of international intellectual property rules. The right of countries to issue compulsory licenses is enshrined in the World Trade Organization’s TRIPS Agreement of 1995 and a unanimous Doha Declaration of 2001 on intellectual property and public health. The WTO’s Doha Declaration also states, “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.”