COMPLUSORY LICENSING Focus on public Health Sector

1. COMPLUSORY LICENSING Focus on public Health Sector Speaker Mohammed Zaka-ur-Rehman • CEO Schazoo Zaka (Pvt.) Ltd. • The Schazoo Laboratories (Pvt) Ltd. • Zaka Healthcare Ltd. • Chairman WTO committee of PPMA. • Standing Committee IPR LCCI. • Former Chairman PPMA.

2. “WTO Patent Rules & Access to Medicines: The Pressure Mounts” “Public outage over the exorbitant prices of HIV/AIDS drugs in Africa is focusing public attention on the harmful role of global patent rules in blocking poor people’s access to vital medicines.” Source: Oxfam, June 2001

3. Conditions prior to WTO Developed Countries • Products & Process are patentable • Patent life – 17 Years • Software & Entertainment Industry is already protected by Patent Laws • Strangle hold of Multinational Companies on Pharma Industry • Prices of generic substitutes much lower than branded products • Govt. measures to promote generic industry • Generic Pharma growth Double than Branded • Generic Pharma becomes an Industry

4. Conditions prior to WTO Examples of price differentials betweengeneric and brand products Belgium Italy Spain Germany France Canada UK US 20% 20% + 25% 25% - 30% 25% - 35% 40% - 50% 80% + 50% - 90% Source: IMS, Pharma Strategy Group

5. Conditions prior to WTO Average Price per Prescription for Brand Name is approximatelyThree Times Generic Drugs (data from US) Source: IGPA Conference 2001, 25-27 June 2001, Cannes, France

6. 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 Conditions prior to WTO USA Brand Price Increases are above CPI,Generic Prices Shrink Less Source: IMS, Pharma Strategy Group

7. Conditions prior to WTO • Developing Countries • Process are patentable for 7-10 years • No Product Patents • In countries with Strong National Pharma Industry, the share of national Pharma industry flourished • Agriculture sector, mostly dominated by multinational companies • No large scale industry in software & entertainment sector • Prices of generic substitutes much lower than branded products

8. Govt. measures to promote Generics-USA • Hatch-Waxman Reforms to Facilitate Generic Industry …. • is Necessary to... • Maximise Consumer benefits at a Time When Drug Prices Are Rising. • Expand Access to Generic Pharmaceuticals • Increase opportunities to Lower Drug Costs • Continue to stimulate R&D that will positively impact Patient Care/Disease Management Encouraging the Use of Generics- U.S. Perspective

9. Govt. measures to promote Generics-USA • Opportunities to Enhance Hatch-Waxman expand Bolar • Maintain Incentives for Challenging or Circumventing Patents and Encourage Product Launch • Maintain ability to Litigate Prior to launch, thereby limiting risks to generic companies • Limit damages to generic companies’ Profits • Create significant penalty for inappropriate listing of patents • Provide forum to challenge listing of patents • Limit brand exclusivities • Provide for Ability of Generics to Use Labelling of Brands Regardless of Patent Status when Safety is an Issue • Create regulatory mechanism for Generic Biologics Encouraging the Use of Generics- U.S. Perspective

10. CHANGES DUE TO WTO Developed Countries • Patent life extension from 17 to 20 Years to encourage R&D • New Indication & Pediatric patent extension • No price impact since rules are already being followed • Health sector already developed: Insurance + Health Services • Importance of new molecules: New molecules dominates the market

11. CHANGES DUE TO WTO Developing Countries • Product Patent vs. Process Patient • Huge price impact since prices were lower due to the presence of generics • Health sector not developed: No Insurance + Health Services, In Philippines & S. Africa 80% population being covered by health services whereas in developing countries only 10% are covered

12. CHANGES DUE TO WTO Developing Countries • Importance of generic industry to increase access and lower the prices in developing countries • National Companies have less R&D budget because of lack of Govt. Support • No National Company could launch new molecule, Multinationals will enjoy the monopoly with increased prices

13. Germany Italy France Spain Denmark UK United States Netherlands Norway Bulgaria Czech Rep. Hungary Croatia Poland Estonia Slovenia Lithuania Mali Egypt China Indonesia Thailand Tunisia Jordan Argentina South Africa In poor countries drugs are largest household and second largest public expenditure for health Pharmaceutical spending, as % of total health spending Developed countries(7 - 20%) Transitional countries (15 - 30%) Developing countries (24 - 66 %) 0 10 20 30 40 50 60 70 Source: IGPA Conference 2001, 25-27 June 2001, Cannes, France

14. Building a large generic market takes time- and requires a combination of strategies National strategies for generics: 1. Supportive legislation & regulation 2. Reliable quality assurance 3. Professional, public acceptance 4. Economic incentives Percent of new prescriptions, U.S. Access Source: IGPA Conference 2001, 25-27 June 2001, Cannes, France

15. Compulsory licensing International examples

16. Compulsory licensing International examples

17. Compulsory licensing International examples

18. Compulsory licensing International examples

19. Compulsory licensing International examples

20. Compulsory Licenses in Pakistan patent Ordinance 2000 Amended 2002 • The patent holder refuses to grant a license to a third party on reasonable commercial terms and conditions: or • Where patent has not been exploited in manner, which contributes to the promotion of technological innovation and to the transfer and dissemination of technology. • Powers Of Controller In Granting Compulsory LicensesOn request, made to the Controller after the expiration of a period of four years from the date of filing of the patent application, or three years from the date of the grant of the patent, whichever might result from the exercise of the rights conferred by the patent, for example, failure to work. Section 58(1) c Section 58(1) d Section 59(1)

21. Pakistani Patent Rules 2003 According Rule 44 • For the purpose of this ordinance the patentee shall be entitled to a payment up to three percent remuneration by the licensee, on the basis of total sales of that chemical product taking into consideration its trade price, under clause (iii) of sub-section (3) of section 59. • Subject to the sub-section (1) of section 59, none or insufficient exploitation of a patent in case of a chemical product intended for use in agriculture or medicines shall be determined on the basis of healthcare requirements of Pakistan and monopolization of the market against the public interest. • Provided, that the patent holder does not make available the subject patented product, in sufficient quantities , so as to meet the requirement of the licensee (s). The licensee (s) shall be at liberty to import or procure the said chemical product from anywhere.

22. Implementation of compulsorylicensing in Pakistan ?

23. Recommendations