Drug procurement is “big money”. Naturally information follows money. But information also enables negotiations. This is particularly vital if you are a health ministry official trying to negotiate prices of medicines based on their patent status while procuring drugs. Although it exists, information around if and where a specific drug has been patented is surprisingly hard to find. But as we know, in global health, what is available may not always be accessible.
Though procurement is an important “health systems function”, experts believe that as a function it has been underappreciated. But there is much at stake here. It is interesting that something seemingly as routine as government procurement can become contentious, when you bring in transparency around patent information.
Remember, that the 2016 UN High Level Panel on access to medicines did say that “Transparent patent information can be an important determinant of health outcomes. When the status and details of intellectual property protections are easily accessible, competitors can confidently release cheaper health technologies similar to out-of-patent products.”
On a recent autumn evening in Geneva last month, experts gathered at an IFPMA sponsored event to discuss how better access to patent information can facilitate medicines procurement.
FACTORS THAT ARE SHAPING THE COSTS OF PROCURING DRUGS
The event took off from a recent report by the Center for Global Development – “Tackling the Triple Transition in Global Health Procurement” that examines a number of factors that impact procurement costs for countries.
According to the report, transitions in epidemiological burdens mean that as countries get wealthy, populations witness more non-communicable diseases than infectious diseases. As a result, countries will buy different kinds of drugs to address changing disease patterns. In addition, with rising income levels donor aid will not always pay for medicines procurement in such countries even as countries struggle with limited experience and capacity for making procurement decisions. Many low-income countries depend on donors for health products procurement. Finally, countries are moving towards Universal Health Coverage, and away from spending on disease-specific programs. Strained budgets already mean that countries need to get efficient in procuring a range of medicines.
So why is drug procurement big money? According to the report, health product purchasing in low- and lower-middle-income countries makes up a sizeable share of overall health spending, with spending on health products amounting to $50 billion per year for nearly 45 countries. The report points out that procurement is essential to the missions of global health entities like the Global Fund, Gavi, UNICEF, UNFPA, and PEPFAR. “In the case of the Global Fund, health product procurement accounts for $2 billion per year, or almost half of its 2017 disbursements,” it found.
Further, donors account for half of all expenditure on health products in low-income countries. But in lower-middle-income countries, where people pay for medicines from their own pockets, 80 percent of health products are procured through the private sector. This means that such expenditure, now borne by the people, does not yet reflect in the health budgets of these countries.
CHALLENGES IN PROCUREMENT
A combination of market failure, institutional inefficiencies and unorganized demand results in poor procurement in many countries, the Center’s report said.
Citing the example of Ukraine, one of the speakers said that according to an estimate in 2015 by the Anti-Corruption Action Center, over 40% of the Ministry of Health (MOH) medicines budget was estimated to be lost to corruption. Christine Jackson of Crown Agents, who is a Project Director for Ukraine’s Ministry of Health offering procurement support, said that challenges included lack of competition, with the supply of medicines for central funded programmes sourced from only a handful of distributors and a centralized supply chain resulting in both stock-outs and stock wastage.
Presenting the findings, Janeen Madan Keller, Senior Policy Analyst and Assistant Director of Global Health, Center for Global Development said that there were high and highly variable prices even for generic products and little competition in the supply of essential medicines. In addition, there were big markups along the supply chain.
The Center’s study found that in low and middle-income countries, prices for basic generic medicines can vary and far exceed wealthy-country prices – sometimes as much as 20 to 30 times a minimum international reference price for basic generic medicines including common pain relievers.
It also found that low and middle-income countries disproportionately purchase expensive branded generic drugs rather than cheaper unbranded generics. (It was pointed out that people who pay from their pockets might prefer off-patent branded drugs, since they trust agencies as opposed to governmental due-diligence. In addition, for some drugs, it was possible that the generic drug in question may not have filed for registration, as a result people continue to buy branded drugs.)
At least some of the challenges in procurement stem from the lack of information on the patents of medicines.
The much-debated 2016 Report of the United Nations Secretary-General’s High-Level panel on access to medicines, had said: “Procurement decisions and generic manufacturing are often delayed by the absence of clear, accurate and up-to-date information on existing and expired patents…..Transparency can ensure fairness during negotiations that take place between biomedical companies and procurement organizations.”
It had noted that patent information is often confusing, incomplete and fragmented. “A single product may be protected by hundreds of patents and compounds may appear under a brand name or an international non-proprietary name (INN). Patents pile up over time, with no indication as to which ones the holder plans to enforce and extend. These factors, as well as excessive patenting, can impede scientific progress and legitimate competition,” the report had said.
CAN PATENT INFORMATION BE NEUTRAL?
While it cannot be disputed that in general, greater information can potentially improve procurement practices, not “all” kinds of information will serve governments better. Experts at the event diverged on the “quality” of information on patents available to make procurement decisions.
Two patent information databases were discussed – Medspal of Medicines Patents Pool and Pat-Informed of WIPO.
Medicines Patent Pool’s MedsPal database provides free access to information on patent and licensing status of selected HIV, hepatitis C, tuberculosis and other patented essential medicines included in the WHO Model List of Essential Medicines in low and middle income countries. It includes patent status data on more than 8000 national patent data from 130 different LMICs, covers over 100 priority medicines. It also features information on 40 licenses and other access agreements in such countries and has data exclusivity information from 15 countries.
Speaking on MedsPal, Esteban Burrone, Head of Policy, Medicines Patent Pools (MPP) said at the event, that there were challenges in collecting patent information. MPP began collecting patent status information on priority medicines in low and middle income countries (LMICs) for its licensing work. He said that it was difficult to identify relevant patents. Many LMIC patent offices did not have searchable online databases, while some only allowed searches with patent number, others allowed searches in local language only and some published patent applications/grants but not legal status. (Also, searches by International Non-proprietary Name (INN) did not yield relevant results)
MPP set out to collect such information from patent offices and with help from WIPO, local patent attorneys, national patient groups among others. Soon it started getting calls from public health stakeholders for such information and requests to make it public.
It collects data from sources such as the USFDA Orange book, Health Canada patent register, publicly available licences, published patent landscapes such as by WHO or UNITAID. In addition, it also checks on patent family information from INPADOC Patent family, WIPO Patentscope, patent holder disclosures. Finally to keep updated, it reviews patent status by referring to online national and regional registers, national patent collections on WIPO PatentScope, direct communications with patent offices, local experts and working with patent offices.
WIPO’s Pat-INFORMED (The Patent Information Initiative for Medicines) also helps pharmaceutical procurement agencies determine the patent status of a medicine. The database is a result of the partnership among WIPO, IFPMA and 20 global pharma companies. (WIPO has in the past worked with the private sector on other areas including initiatives such as WIPO Green.)
As a part of the WIPO Development Agenda, WIPO has been mandated by member-states to improve access to publicly available patent information. Pat-INFORMED follows this mandate. The database of Pat-INFORMED includes information on 20 Companies, 224 INNs, more than 19000 Patents and 600 Patent Families.
Members of the civil society present at the event, raised questions on conflict of interest, and meaningful transparency around patent information with respect to Pat-INFORMED.
They were of the view that there is a conflict of interest since WIPO’s database furnishes information provided by the pharmaceutical industry. Experts said that there were risks that this information provided by one set of stakeholders could become a reference.
Civil society members called for meaningful transparency on patents. “Poor quality information can for example, delay the entry into generics,” a representative from MSF said. Higher and stringent requirement of disclosures on patent information is necessary, the expert added.
“Procurement agencies with limited knowledge may not be aware that a patent status on a particular drug might have changed,” a civil society expert said.
One of the key goals of bringing transparency to patent information is precisely this – more light will enable governments, generic companies, researchers and civil society to easily review and oppose questionable patent applications and grants and monitor whether patent officials are applying patentability criteria as required by national laws – as discussed in the UNHLP report.
It was pointed out that it was not always possible to update the change in legal status of some patents in real-time. Since it is a voluntary endeavour, it was up to the companies to update the information and hence there was a possibility for errors in the mechanism, it was said.
However, a rejected or revoked patent must reflect in the database, else it is potentially problematic. To be sure the WIPO database has disclaimers spelling out that it does not give the freedom to operate.
Civil society members and others also urged WIPO to review the association with the industry that provides patent information, in order to reduce conflict of interest.
It was important for WIPO to “de-emphasize commercialisation”, one speaker from Third World Network said. While searching for information on Pat-INFORMED, it is possible to get in touch with patent holders – this amounted to “furthering the commercial interests of originator companies”, one expert was of the view.
Thomas Bombelles, Head, Non-Governmental Organizations and Industry Relations , at WIPO, who was one of the speakers at the event, said, “Pat-INFORMED is aimed at increasing patent transparency. It offers practical and accessible information on drug formulations that would otherwise be available as highly specialized patent information which is often complex. The participating companies in this program are responsible for providing updated information. Based on the information available on the website and in the database, it has been clear since the beginning that the project’s value is in its provision of clear information. The simplicity means that it cannot capture every aspect of a complex patent, and that bona fide procurement authorities can get more detail from the patent holder. The disclaimers made this point about the patent status of medicines in a clear and simple way. In this sense, it is clear to all users that Pat-INFORMED website is not a freedom to operate license.”
Further, there have been calls for WIPO to independently verify the information on Pat-INFORMED. Speaking at the event, Denis Broun, Director of public and government affairs for Cipla said “As a generics company, patent intelligence is crucial for us. We rely on our own patent lawyers directly. We will not rely on other sources of information as consequences can be very expensive for us.”
“There cannot be full transparency around the patents if only one side supplies the information. We would want WIPO to verify the information on Pat-INFORMED and guarantee its accuracy,” Broun told the gathering.
To be sure, the UN High Level Panel on access to medicines had recommended that governments should establish and maintain publicly accessible databases with patent information status and data on medicines and vaccines. “This information should be periodically updated and consolidated by WIPO in collaboration with stakeholders to develop an international, easily searchable database which should include standard international common names for biological products; international non-proprietary names for products, either as known at the time of application or after the granting of a patent; and dates of grant and expiry”.
DUE DILIGENCE ON PATENT INFORMATION
Information can be political, particularly when it comes to something as high-stakes as drug patents. In the interest of efficiency and lower costs, governments and procurement agencies should do their own due diligence on patent information while buying drugs.
Some countries such as Chile have mechanisms to ensure greater efficiency for procuring drugs. “For countries to procure drugs efficiently, a number of different approaches need to be considered from different perspectives, because the medicines market has many intermediaries,” Martin Correa, Counsellor for the Permanent Mission of Chile to the WTO, WIPO and other economic international organizations based in Geneva, and former Head of the Intellectual Property Department of the General Directorate of International Economic Relations (Direcon) of the Ministry of Foreign Affairs, Chile, said.
Chile has established an inter-agency cooperation framework to enhance the communication among different governmental authorities for better information exchange. Health, trade and patent offices work together, he added. He said that Chile also has an electronic centralized public tender process so that there is sufficient competition for generics. In addition, an observatory for medicines pricing established recently also provides valuable information to discuss and negotiate better with innovator companies. In addition, Chilean law also enables procurement drugs at the lowest prices available globally. The government also makes use of different international frameworks and initiatives to procure medicines.
Even as diversity in information sources might improve access to patent information, the quality and neutrality of information should remain a consideration for procurement agencies and governments.