William F. Haddad: Chairman/CEO, Biogenerics, Inc., has been a pharmaceutical executive since 1986. As Chairman of the generic trade association, he initiated and negotiated Hatch-Waxman, the legislation that opened the door to generics in the United States. He was CEO of a major generic manufacturing company. Earlier he worked with Jack and Robert Kennedy and Senator Estes Kefauver. He was one of the founders of both the U.S. Peace Corps and the Office of Economic Opportunity (poverty program) and served as the Inspector General or both organizations. As a newsman at the NY Herald Tribune and the NY Post, he won a dozen awards for investigative reporting. He also learned about the wiretapping of Watergate three weeks before the break-in and reported it to the Democratic leadership. He exposed the worldwide tetracycline cartel by locating secret cartel minutes in two Latin American countries, destroying the cartel and leading to a $200,000,000 fine for Pfizer. He also found the secret minutes of the Uranium cartel that led to Congressional hearings conducted by then Congressman Albert Gore and Haddad. Using New York State's subpoena he uncovered of the role of the New York banks in profiting from the collapse of the City's financial system; located and exposed secret state police files that contained the names of a million citizens almost all had neither been accused of or committed a crime; he investigated organized crime's role in sports; and he subpoenaed the major television networks to explain covert arrangements with advertisers in advertising to children. As a volunteer, he worked with Cipla to remove the barriers to the use of generic AIDS medicines. He has published several books. He was a merchant marine officer at sea when he was sixteen.
(News Commentary and Background)
The AIDS Story You May Not Have Heard
William F. Haddad, Chairman/CEO, Biogenerics, Inc.
wfhaddad@aol.com
The United States government, the European Union, multinational pharmaceutical companies and powerful conservative organizations are once again trying to prevent generic companies from providing essential medicines to the poor nations of the world. This time their prime targets are India where recent court decisions may open the door to “compulsory licensing” of essential medicines and the Global Fund the major source of financing for AIDS medicines. Also under attack is the World Health Organization’s (WHO) pre-qualification system for AIDS and other essential medicines.
India remains the major supplier of generic medicines to Third World nations.
Compulsory licensing can permit competition when a patent is claimed and an essential need identified.
The U.S. team includes former Ambassadors Mark Dybul and William Steiger who helped delay AIDS medicines to millions dying from the illness in poor nations. This was done after the formation of the President’s Emergency Program for AIDS Relief (PEPFAR) in 2003 when they insisted that only products approved by the U.S. Food and Drug Administration (FDA) would qualify for PEPFAR. They intentionally and deliberately ignored the regulatory requirements created by western and other regulators for the World Health Organization (WHO), a system already in universal use without problems.
The Indian generic companies were excluded until 2007 - 2008 when they received PEPFAR approvals. During this period only big Pharma benefitted at their high prices while millions died or went untreated. This tragedy can singularly be attributed to the above persons. Their target now appears to be the Global Fund.
India and other nations were required to abandon national laws governing the manufacturing of medicines as a pre-requisite for joining the World Trade Organization (WTO). Uniquely, generic manufacturers in India had developed the strategies and science to clone brand products using methods that often avoided patent protections. For decades Indian generic pharmaceutical companies have manufactured medicines, including the basic raw materials, that are approved by the U.S. FDA and universally used in the United States.
Poor nations depend on affordable Indian manufactured generics to meet their medical needs. Branded medicines, often sold at U.S. prices, are simply unaffordable.
The WTO requirement ended that system and obedience to rigid patent laws replaced it in 2005 and was effectively back-dated to 1995. This retroactive action was repressive.
An “escape” provision in the WTO agreement permits the manufacturing of essential drugs under certain circumstances. In India the unaffordable price for a life saving medicine can qualify for that exemption. However, few of these safeguarding processes work according to their design. Behind the scenes politicians, some hired, some sincere, pulled the strings. In the United States it required thirty years to obtain legislation enabling the routine manufacture and approval for generic medicines.
The burr under the saddle of the multinational pharmaceutical companies (Pharma) is India’s apparent refusal to deny patients access to essential medicines because the demanded price is unaffordable. Recently, an Indian court ordered a Pharma company to reduce its price and accept a stipulated royalty for a life saving cancer medicine.
In another, the Indian high court summarily dismissed a challenge from Bayer Inc. claiming a new combination of off-patent medicines constituted a new and patent-protected product. The Court ruled the so-called new medicine was, in effect, “evergreening” a term used to describe drugs that combine existing medicines with no additional therapeutic impact yet are able to claim and often obtain new patents that can prevent competition for over twenty years although they offered no medical advantage beyond existing patents. These patents have been labeled as “frivolous”.
In India the multinational pharmaceutical companies often resort to frivolous patenting. They also conduct multiple patenting of the same product in different patent jurisdictions hoping one of them would be approved. This undermines the spirit of patenting.
Another shock for Pharma was the recent revoking of Pfizer’s patent for its cancer drug Sutent following “post-grant” opposition to the patent by Cipla, Ltd.
Dow Jones also noted that Novartis AG has been unable to patent it’s cancer drug Glivec in India after its application was rejected in 2006 and that the patent office also rejected an application from Gilead Science for its HIV medicine Viread and noted Roche has been unable to obtain a court order prohibiting the sale of clones of the cancer drug Tarceva.
Conservative associations and their writers perpetuate and promulgate discredited arguments claiming generic medicines, clones of the brand, are “less effective” and will deny the multinational pharmaceutical companies, often the most profitable segments of any economy, the financing they require to discover new drugs. Although both claims are routinely denounced by the medical community and the FDA, they persist as alibis to deny essential and affordable generics in the poor nations of the world.
Essential AIDS medicines bypassed many of these clichés when WHO with western and other regulators created a “one stop” universal scientific approval process, “pre-qualification” accepted by all Third World nations (a first) and by all entities financing their use. Pre-qualification ended nation-by-nation approvals.
It should come as no surprise that pre-qualification is a target of Pharma and others because it deprives Pharma of their ability to use politics and the courts to stretch patents, denying or delaying the use of generic clones. Many generic companies lack the resources to wage legal battles in each country.
It was this technique that was effectively used to deny AIDS medicines for most of the world. Out of the 36,000,000 afflicted in Africa only 4,000 were in treatment at a prohibitive cost of $ 12,000 a year.
Pharma now fears a repeat of this defeat will open the market in poor nations to affordable medicines.
To challenge Pharma’s monopoly of essential AIDS medicines, an Indian scientist, Dr. Yusuf Hamied of Cipla Ltd., created Triomune, a unique, regulated combination of the most effective AIDS medicines in one tablet taken twice a day and reduced the cost to a dollar-a-day in 2001. Unfortunately, Triomune, the so-called “triple” could not be sold. Thirty-eight Pharma companies sued in a South African court to block the use of generic drugs. That action effectively prevented the use of generic AIDS medicines.
When Cipla joined forces with Doctors Without Borders (MSF) in 2001 the media exposed Pharma’s campaign to deny affordable AIDS medicines from reaching the millions suffering and dying of AIDS. At first there was disbelief. When the reality set it, the intensity and anger of the international condemnation grew. Why would Pharma block the use of a medicine known to prolong lives when it knew few to none in the Third World could afford their prices? Why would they allow entire families and communities to be destroyed? Editorially, the answer was provided by the media: Pharma feared price comparisons to their monopoly in western nations, where the cost of a year’s treatment was approximately $12,000 to $15,000 per patient per year, would lead to demands to lower the cost.
Finally, unable to withstand the impact of the truth, the Pharma companies, walked out of court (some wrote “with their tails between their legs”) and abandoned their legal action. Generic AIDS medicines began to save lives.
This year, UNAIDS and others reported more than 8,000,000 persons were using generic AIDS medicines at a cost of approximately $85 per patient per year.
PEPFAR
President Bush in his State of the Union address on 31st January 2003, reacted to the dramatic change in the cost of AIDS medicines and used his State of the Union message to call for the largest contribution of any nation for AIDS treatment.
In an emotional statement, he told the U.S. Congress doctors would no longer be required to tell their patients “…we can’t help you. Go home and die….In an age of miraculous medicines no person should have to hear those words…(because)…the cost of these drugs have dropped from $12,000 a year to under $300 a year which places a tremendous possibility within our grasp.”
Congress responded with bi-partisan support and appropriated fifth billion dollars to finance PEPFAR. That donation has now been increased to fifty billion.
Without explanation a tight circle of government executives cooperating with Pharma began an effective campaign to insure only their high priced AIDS medicines would be financed, a goal diametrically opposite to the purpose of the Bush plea and the action of the Congress.
Coordinated Efforts to Deny Financing for Generic AIDS Medicines
As difficult as it is to believe, but after Congress authorized the fifteen billion dollars for PEPFAR, U.S. government officials began to erect roadblocks to prevent the financing of generic medicines. Their first action, without consultation or discussion, was to announce the WHO pre-qualification system, already in widespread use, could not be used to qualify AIDS medicines for PEPFAR funds. No other nation had placed domestic restrictions on their financing for AIDS medicines.
In the United States, the approval of FDA would be required for PEPFAR funds, an expensive and lengthy process. No justification for this action was provided. The worldwide acceptance of pre-qualification was no longer valid. In essence, at its very best, the process would deny generics access to PEPFAR funding undermining the purpose of both the President and the Congress.
By happenstance, the announcement coincided with a worldwide AIDS conference in Paris. There Non-Governmental Organisations (NGOs), Third World nations and the media confronted the U.S. representative, Secretary of Health and Human Services, “Tommy” Thompson asking for an explanation of why the existing WHO system was bypassed?
The media also wanted to know why the expensive and lengthy new tests were required when the approved medicines were readily available and already in use. Was there a problem with the medicines already pre-qualified by the WHO and universally accepted by all recipient nations? None had been reported. Wouldnât the new requirement discourage and delay competition?
Media bureaus around the world reported they could not find reports of failures of the AIDS generic medicines and WHO said had received none. Was this a manufactured solution to a problem that did not exist?
At first, Secretary Thompson response was hostile refusing to offer an acceptable explanation. But the intensity of the NGO and media questioning continued.
When Secretary Thompson returned home, the FDA requirement was quietly withdrawn. Nations could use WHO’s pre-qualification to qualify for PEPFAR funding.
As it turned out, the withdrawal was not a decision, but a tactic. Six months later a lead story in the Sunday New York Times announced the FDA requirement was re-instated. Again there had been no consultations. The generic companies organized and protested but their arguments were ignored. Someone, somewhere had made the mysterious decision and it would remain.
Some Pharma executives and a cadre of U.S. officials believed generics either could not, nor would not, submit to the long and expensive FDA process. They were wrong. To their surprise, Cipla submitted to the FDA Triomune, the identical product previously approved by WHO and already recognized as WHO’s “first line treatment” for AIDS.
Three years later the FDA approved Triomune without change, opening the door for Africa and the world to purchase generic drugs with PEPFAR funds.
It was estimated one million people might be alive today if use of the generic had not been delayed by politics.
The Bad Guys Return: Déjà vu All over Again
Two men responsible for delaying universal use of generic AIDS medicines, are no longer in the U.S. government, but are back again, this time their target is the Global Fund where, once again, they are in a position to deny the use of generic AIDS medicines. They are:
Former Ambassador William Steiger
Steiger formerly represented the United States at the Global Fund and WHO and from those positions he threatened that if the Fund financed generics, the United States government would terminate its contribution to the Fund, in effect pulling the financial rug out from under the Fundâs fiscal resources. He enhanced his threat by explicitly warning that he had influence beyond his position. He was, he said, the “godson” of the first President Bush (true) implying he could pick up the phone and call the current President if necessary. He also bragged his father had introduced Vice President Cheney to politics (also accurate).
Steiger’s threats paralyzed the Fund’s operations until a courageous participant in those meetings asked an intermediary to meet him at the Geneva airport where he silently slipped a sealed manila envelope across the table. Inside was confirmation of Steiger’s threats. Confidential distribution of the memo ended Steiger’s influence and the Fund began to finance generic medicines. Today, as noted, almost all of Fund’s monies for AIDS medicines are used to purchase generics.
Unfortunately the story does not end there. Steiger is now back working directly with the Fund and in a position to influence whether brand or generic drugs are used.
When an NGO discovered his involvement, the Fund, at first, denied he was employed but upon reflection admitted “yes” Steiger had returned but only as a “consultant”. Later it was learned his “advise” would cover what appears to a revised concept in the purchase of AIDS medicines. A virtually hidden paragraph in the Fund’s mission charts a new purchasing policy, opening the door to use of higher priced brand drugs. That power lies in one sentence consistent with Pharma’s age-old arguments against generic drugs. It reads “…the Global Fund procurement policies should not prioritize purchasing on price alone and should place more value on quality.”
Steiger comes to the Fund with renewed authority. He was a principal in a critical review of the Fund that has resulted in changes in the Fund’s management personnel.
Steiger working for former HHS Secretary Mike Leavitt helped conduct the review of the Fund following a critical investigative report by the Fund’s Inspector General.
Leavitt was recently appointed by former Governor Mitt Romney, now the Republican candidate for President, to manage his “transition team” one of the most influential roles in creating an administration if Governor Romney wins the election.
Former Ambassador Mark Dybul
Steiger may be joined at the Fund by former Ambassador Mark Dybul who became the manager of the U.S. AIDS program and was recently summarily discharged from his position by President Barack Obama a day after his re-appointment was announced. It appears he was given a day to leave office but the reasons remain obscure.
Dybul’s opposition to generic drugs dates back to a meeting in Botswana organized, in part, to provide the rationale for requiring FDA registrations for generic medicines, a process, participants at the Conference argued, would both delay the urgent need for the medicines and was unnecessary because the medicines had been “pre-qualified” for use by WHO.
At the Conference Dybul and the others were confronted by a woman who managed a Catholic AIDS program in Africa. Reflecting the attitude of the NGOs at the meeting she said the delay in PEPFAR funding for generic drugs would force her to treat one rather than four patients, a reminder of the days before generic AIDS medicines became available. The official U.S. delegation that co-sponsored the meeting did not respond but her remarks lit a fuse and others sharply questioned the reason behind abandoning pre-qualification.
At this writing (October, 2012) it is reliably reported Dybul is on the short list for Executive Director of the Global Fund.
U.S. Official Warns India, But Gets Her Facts Wrong
Undersecretary of Commerce, Ms. Teresa Stanek Rea, who also serves as the Deputy Director of the Patent and Trademark Office recently told Congress of the efforts of the United States government to stop compulsory licensing in several countries inaccurately claiming compulsory licensing was illegal under WTO’s TRIPS (Trade Aspects of Intellectual Property Rights). She said she was particularly outraged when an Indian Court awarded a compulsory license for a life saving cancer drug , Nexavar, to Natco to manufacture. The drug was not widely used in India because of its patent protected price of $5,500 a month. As a result of the pricing, only two percent of those needing the medicine could afford that price because India’s per capita yearly income is approximately $ 3,693.00.
The case was a classic example of a nation that could not afford to buy the medicine but its pharmaceutical companies, capable of manufacturing the medicine to western standards, were prevented from manufacturing and selling it at an affordable price. The proven and irrational result was sickness and death.
Fortunately, Ms. Rea had her facts wrong.
Article 31 of the TRIPS agreement expressively permits compulsory licensing, the result of long and hard fought discussions and compromises within WTO for the right to remove patent protection for an essential medicine sold at a price beyond the ability of a patient to purchase it. Many nations demanded that right as a condition of joining WTO.
Anand Grover, the United Nations Rappoteur on the Right to Health and Senior Advocate for the Indian Supreme Court said “setting an exorbitant price which makes the drug unavailable to those who need it…(is) grounds for the issuance of a compulsory license.”
Peter Maybarduk, Director of Public Citizens Access to Medicines added: “compulsory licensing is a sovereign right to protect health and other interests. It has been around as long as patents have been around.”
Ms. Rea also argued: “we are doing everything to respect the rights of U.S. innovators.”
She was wrong again. Bayer, the company involved, is a German company.
She also said she was working hard to stem the tide of compulsory licenses and said her targets were foreign officials and judges.
Facing the factual challenges, Ms. Rea finally admitted she was wrong, yet she remains in office and the media has shown very little interest in pursuing her story although her behavior undermines years-long struggles by nations to provide access to essential medicines at affordable prices with “compulsory” licensing as the right of a nation to protect its citizens.
Due to pressures, public and secret, only four nations have used compulsory licensing to lower the cost of essential medicines even as the AIDS pandemic devastated their nations.
Roger Bate, the Generic Headhunter, Returns
Roger Bate, closely affiliated with the powerful and well financed American Enterprise Institute (AEI), has returned to once again harass generics. His was an important, skillful anti-generic voice and his access to the media was impressive.
Bate skillfully used that access and his affiliation with the AEI to advance what was/is recognized as an anti-generic agenda. Now, he is back and very dangerous. It appears his new target is WHO’s pre-qualification program. He recently promulgated an “academic” study that implied approved malaria medicines were sub-standard.
The Bate conclusions are now the subject of an independent review to determine if conclusions of the study meet scientific requirements.
One early theory for his recent outrage may be that for the first time, FDA has delegated to WHO pre-qualification the right to certify malaria medicines but it now appears his target may have been the widely acclaimed October announcement that a jointly developed fixed dose malaria medicine, Mefliam Plus had obtained WHO pre-qualification making it eligible to bid on tenders that receive funding from international procurement agencies including UNICEF and the Global Fund.
Bernard Pecoul, executive director of the prestigious non-profit organization DNDi (Drugs for Neglected Diseases initiative) said the new drug (a combination of artesunate and mefloquine) meets an important public health need and forms a part of a malaria treatment necessary to control the disease. The combination was originally developed by DNDi and Brazilian government-owned pharmaceutical firm, Farmanguinhos and a technical transfer between Farmanguinhos and Cipla achieved in 2010. WHO’s pre-clearance opens the door to delivery of an important new malaria drug to poor nations without the necessity to seek approval nation-by-nation.
But Bate’s return to the fray signals that the team of “hired hands” from conservative associations may be preparing to renew their attacks on generic medicines and pre-qualification that remains a target of Pharma companies.
The European Union’s Anti-Counterfeiting Campaign
Quite suddenly, the European Union began to remove generic cargoes touching European ports based on claims from multinational pharmaceutical companies that the medicines were “counterfeits”. After several cargoes had been removed, it was revealed “counterfeiting” was a merely a claim by Pharma companies that a generic cargo was destined for a location where the multinational corporations claimed patent rights might be violated. The vague charge was sufficient to cause a ship to unload the medicines before it could continue on its voyage.
Upon investigation it was revealed the seized cargo contained AIDS medicines destined to the American Embassy in Nigeria.
Mistakes were admitted, but the so-called “counterfeit” law remains in force although seizure may now require more proof than a claim by a competitor. If truth be told, it is the branded product that is most often counterfeited because it can command a higher price. There is little doubt that “real” counterfeit medicines are delivered and sold and generic companies cooperate with government officials to locate their source.
International Trade Agreements
Hidden clauses in international agreements have consistently included exclusive and often unwarranted protection of brand products and are often demanded by western nations. The United States recently admitted it was pressuring Pacific nations to “sign off” on a new treaty many NGOs and generic companies believe will use “patent claims” to prevent sale of generic medicines. Most often these treaties that are negotiated in secret, contain measures that fly a “patent flag” but are blunt attempts to restrict generic competition.
Conclusion
The situations discussed in this document are accurately reported and only focus on recent activities. For decades similar anti-generic strategies were used, many with the cooperation of western officials.
The success with providing AIDS medicines at affordable prices has heightened the fear of Pharma companies and has only increased their political activities around the world. Compulsory licensing is perhaps the only remedy that will curb that influence.
Thank you for taking the time to read this document.
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