Financial constraints dash Africa’s hopes of producing affordable drugs

Thursday February 2 2017

Amendment to WTO’s Trade Related Aspects of

Amendment to WTO’s Trade Related Aspects of Intellectual Property Rights Agreement (Trips) has been ratified to boost export of medical products to poor nations after getting approval from two-thirds of the organisation’s membership. FOTOSEARCH 

By The EastAfrican Team

African pharmaceuticals will not immediately benefit from the amendments to the World Trade Organisation’s intellectual property laws that recently came into force.

The WTO Trade Related Aspects of Intellectual Property Rights (Trips) restricted firms producing medicine under compulsory licences — without consent of the patent holder — to trading them within the country of manufacture.

A revision to this law allowing pharmaceuticals to export generic medicine to developing countries unable to produce them was adopted in 2005, but remained ineffective since two-thirds of the organisation’s members had not ratified it.

Five states — Burkina Faso, Nigeria, Liechtenstein, the United Arab Emirates and Vietnam — recently endorsed the amendment, giving it life beginning January 23.
In East Africa, Burundi is the only country that has not ratified the protocol.

Companies in Africa will, however, take time to extract value from this opening since many lack the capacity (mostly financial) to manufacture the generics before seeking regulatory approvals to exploit the export market.

Palu Dhanani, managing director of Universal Corporation Ltd (UCL), a Kenyan pharmaceutical firm, said firms in the country “have not yet reached the level” to benefit from Trips.

Cost of production

“If there is a new medication under patent, and I want to manufacture and sell it under Trips, product development can cost anything between $1 and $5 million,” he said.

“After that, you apply to sell it under Trips. This is an expensive process for African companies. In Africa, I think there is only one company in South Africa, that currently utilises Trips,” he added.

Trips, which has been in force since 1995, can only be used to manufacture drugs of great national importance or to mitigate national disaster such as HIV/Aids, tuberculosis and malaria, which claim the lives of millions every years.

However, since these products are held under patent, their manufacture by third parties had to be controlled in order to safeguard the interests of the rights holder and meet minimum production standards.

One of the intellectual property rules prescribed that these medicines could not be sold outside the borders of the country where a third-party pharmaceutical is producing them.

International organisations such as the United Nations argued that this regulation was harmful to developing countries that are “facing public health problems but lack the capacity to produce drugs.”

Approved in 2005

“As important as trade policy is, health and wellbeing must take precedence,” said Amina Mohamed, Kenya’s Foreign Affairs Minister, who chaired the WTO General Council at the time when the amendment was approved in December 2005.

“WTO members recognise this and have proven how seriously they take health issues by ratifying and putting into force an amendment to WTO rules that will facilitate access to essential medicines in low-income countries,” she added.

To access the Trips market, companies have to ensure that their medication and facilities are of a standard that allows them to compete in the global pharmaceutical market.

WHO and the Food and Drug Administration are among the regulatory bodies whose hard-to-get green light is needed prior to selling these generics.

Five years ago, UCL secured approval from the WHO to produce Lamozid — an anti-retroviral drug — opening the door to lucrative tenders floated by the Global Fund.

Despite this feat, Mr Dhanani said it is still costly to produce such drugs.

“Last July, we merged with an Indian company, which has already developed drugs that conform to Trips. When we bring these drugs here, we’ll apply to sell them under Trips,” he said.

The amendment (new Article 31bis) to the 1994 Agreement on Trips and Public Health, allows countries producing generic medicines under compulsory licence to export all of the medicines to least-developed countries that lack manufacturing capacity themselves.

It entered into effect once two-thirds of the WTO membership ratified it.

The number needed kept climbing as new members joined the WTO over the years and now stands at 164 members.

According to the amendment, governments can now issue compulsory licences to allow companies to make a patented product or use a patented process without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder.

Reasonable prices

“It gives legal certainty that generic medicines can be exported at reasonable prices to satisfy the needs of countries with no pharmaceutical production capacity, or those with limited capacity to import affordable generics from countries where pharmaceuticals are patented,” said WTO director-general Roberto Azevedo.

It is hoped the amendment will help patients suffering from HIV/Aids, tuberculosis and malaria, as well as other epidemics.

Member states who are yet to accept the Trips amendment currently have until end of December 2017 to do so, WTO said.

The original amendment was pushed by the African Group. Two of the group’s members, Uganda and Mozambique, currently, are building their own capacity to manufacture generics.

CIPLA-Quality Chemicals Ltd, an Indian pharmaceutical company based in Uganda, manufactures antiretroviral and anti-malarial drugs for the East African market, but the cost of production is high.