TWN Info Service on WTO and Trade Issues (May10/02)
Welcoming the move
The compulsory license
for ritonavir was granted by the Ecuadorian government to Eskegroup
SA on 14 April, a Latin American distributor headquartered in
The patent for ritonavir, sold under the brand-name Kaletra, is held by the US-based pharmaceutical company Abbott Laboratories.
The compulsory license was issued by the national Ecuadorian Institute of Intellectual Property (IEPI), and the term of application of the license is until 14 November 2014.
On 23 October 2009, said the IEPI document granting the compulsory license, Ecuadorian president Rafael Correa had declared access to medicines used for the treatment of diseases that affect the Ecuadorian population, and which constitute a priority for public health, to be in the public interest. To this end, it was determined that compulsory licenses could be granted on patents for drugs for human use which are necessary for the treatment of these diseases.
According to the IEPI document, on 5 January 2010, Eskegroup SA submitted to IEPI an application for a compulsory license to be granted for ritonavir, following which on 15 January, IEPI issued instructions for the granting of compulsory licenses for patented drugs.
On 19 February, Eskegroup SA submitted the required documents concerning its application, and Abbott Laboratories was duly notified of the application by IEPI.
In issuing the compulsory
license, the IEPI cited amongst others the Constitution of the
On the issue of financial compensation to Abbott Laboratories, the IEPI document said that the "Tiered Royalty Method" (TRM) shall be the model and guide in the calculation of royalties to be paid by Eskegroup SA.
[The IEPI document cites a joint publication by the UN Development Programme and the World Health Organization titled "Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies" as the global guide for royalty rates for pharmaceutical products. The 2005 document was authored by James Love, previously of Consumer Project on Technology, and now Director of Knowledge Ecology International.
[According to the joint UNDP/WHO publication, in the TRM, the royalty rate "is not based upon the price of the generic product. Instead, the royalty is based upon the price of the patented product in the high-income country. The base royalty is 4% of the high-income country price, which is then adjusted to account for relative income per capita or, for countries facing a particularly high burden of disease, relative income per person with the disease."
["The TRM provides a more rational framework for sharing the costs of R&D, and may be more sustainable for some middle- or high-income countries that are sensitive to global norms concerning the sharing of R&D costs. The TRM provides for much higher royalties in middle- and high-income countries with low burdens of disease, and the lowest royalties for countries that have the lowest incomes and the highest rates of disease burden," says the joint publication.]
Applying the TRM calculation, Eskegroup SA has been instructed by IEPI to pay the following financial compensation: The royalties established in favour of Abbott Laboratories are US$0.04 per capsule for Ritonavir 100mg; US$0.02 per capsule for LOPIMUINE Lopinavir 200mg + Ritonavir 50mg; US$0.01 per capsule for Lopinavir 100mg + Ritonavir 25mg; and US$0.0082 for the paediatric Oral Solution formulation of Lopinavir 80mg + Ritonavir 20mg.
In a press release,
Public Citizen said that by opening the door to competition from generic
According to Public
Citizen, while the patented version of the drug costs
"Ecuador is setting an example for countries that seek to expand access to life-saving medicines, but struggle to pay for ever-more expensive drugs," said Peter Maybarduk, director of Public Citizen's new Access to Medicines Programme.
"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 added.
According to Public
Citizen, many countries have used compulsory 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
It noted that
A UNAIDS 2008 country
report estimated that 42% of Ecuadorians needing antiretroviral therapy
In a separate press release, civil society organisations that came together in Quito in a meeting of the Latin American & Caribbean-European Alliance for Access to Medicines assessed and praised Ecuador's recent decision to issue a compulsory license for Kaletra (lopinavir + ritonavir), a key medicine in the treatment of HIV/AIDS.
Roberto Lopez, Director
of Health Action International for Latin America and the Caribbean (AISLAC)
and a member of the
"Competition is the most effective way to reduce the prices of medicines. Promoting competition through multiple measures including compulsory licenses is therefore an important step to protect the right to health and access to medicines. Other countries in the region should follow suit," said Lopez.
According to the
Jose Teran of HAI Ecuador said, "Until now, treating HIV/AIDS with Kaletra under Abbott's monopoly has cost the Ecuadorian government around $1,000 annually per person. Now, under the compulsory licence, generics are already available to the government at $800. Prices will continue to fall as the government licenses more competitors."
Sophie Bloemen of Health
Action International (HAI)