Legislation requires product licensing of essential prescription drugs, disclosure of manufacturing costs

Washington, DC – In an effort to make prescription medicine more accessible and affordable for people across the country, U.S. Congressman Sherrod Brown (D-OH) today introduced an initiative that would use market competition to reduce the high cost of prescription drugs. Brown, the top Democrat on the Commerce Health and Environment Subcommittee, said his proposal would implement product licensing of patents on essential medicines whose high prices are a detriment to public health.

“Drug companies have scored a triple-double. They get huge tax breaks, most research and development is publicly funded, and drug firms’ charge the highest drug prices in the world. American drug companies have had it good for a long time. But these good times have been at the expense of people who cannot afford to pay absurdly high prescription drug prices. We must protect public health and make essential prescription drugs more affordable,” Brown said.

“This bill lowers drug prices through competition, not price controls. It also will help a child from a low-income family or a senior on a fixed income afford medicine prescribed by a doctor,” he added.
Brown’s Affordable Prescription Drugs Act would allow consumers to obtain lower prices through competitive, rather than monopolistic, pricing. Under certain conditions — if a prescription drug provides a substantial public health benefit — the federal government could require drug manufacturers to license their patent to generic drug companies. Competitors would be permitted to market new drugs before patent expiration, paying the patent holder royalties for that privilege. Under the bill, individuals or citizen groups can request the Secretary of Health and Human Services to determine that compulsory licensing of a patent-protected drug should occur.

The legislation also would require drug manufacturers to publicly disclose audited financial information relevant to the pricing of their drugs. This provision will allow consumers information to assess the reasonableness of drug companies’ pricing. If a drug manufacturer fails to comply with this provision, it would be ineligible to participate in federal health care programs, including Medicare, Medicaid, and veterans health care.

“The drug companies must understand how important their products are for the American people, especially the elderly. They’re not selling VCRs or furniture, where people can look elsewhere for a less expensive product, or simply go without. We’re talking about health care, and the fact that people often can’t live without these drugs,” Brown said.

Brown said his bill is necessary because drug companies charge Americans higher prices — in many cases twice as high — than the citizens of any other industrialized nation. He said an average dosage (60 tablets) of Zocor, which treats high cholesterol, costs $44 in Canada and a $102 in the U.S. In addition, one month’s supply of Tamoxifen, which treats breast cancer, sells for $156 in the United States compared with only $12 in Canada. Brown also noted drug company profits outpace those of every other industry by at least 5 percent and that drug companies spent $8.3 billion on marketing and advertising last year.

“Prescription drug prices can be reduced and not affect drug firms’ research and development capabilities or their advertising budgets. But these prices cannot remain high without seriously affecting public health and fueling unsustainable health care inflation. Our goal is to ensure working families and low-income people obtain access to prescription drugs,” Brown said.

Brown today joined Reps. Tom Allen (D-ME), Marion Berry (D-AR), Janice Schakowsky (D-IL), and Dennis Kucinich (D-OH) in unveiling the measure at a Capitol Hill press conference.

AND WHAT YOU CAN DO ABOUT IT

AIDS has reached epidemic levels in many developing nations. 90% of the 33 million HIV+ people worldwide live in Latin America, Asia or Africa. The U. S. Surgeon General has compared the deadly spread of AIDS in sub-saharan Africa (where 22.5 million are HIV+) to the Black Plague that swept accross Europe in th 14th century.
The vast majority of AIDS patients around the world live in poverty, and would never be able to afford prices charged by U.S. pharmaceutical firms. Therefore, governments around the world have moved to provide lifesaving drugs to their citizens at far lower prices by using two processes: compulsory licensing and and parallel importing.

What is compulsory licensing?

A government pays royalties to a patent holder, and permits a third party to produce a patented good. This introduces competition into the market and can lower the price of medicine by 75% or more. Its specifically permitted under Article 31 of the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights, known as the “TRIPS Agreement.” It is a common practice among WTO Member countries, including the U.S.

What is parallel importing?

It is the import of a product from one country, and then the resale into another country. Drug prices vary widley in different parts of the world, so the savings can be dramatic. The practice is allowed under Article 6 of the TRIPS Agreement. Like compulsory licensing, it is commonly practiced by WTO Memeber countries. For a more thorough explanation of the legality and use of these both compulsory licensing and parallel importing, click here.
What has the U.S. done to prevent developing countries from taking these measures? U.S. foreign trade policy favors the profits of multinational drug companies (which give money to politicians) over the lives of terminally ill poor people abroad (who obviously do not give money to politicains). American economic diplomacy is overseen by Charlene Barshefsky, the U.S. Trade Representative (USTR). Under her leadership, the U.S. government has threatened and used trade sanctions to prevent foreign nations from using compulsory licensing and parallel importing to save lives. When Brazil attempted to save lives, tariffs on their exports were doubled until they backed down. Other nations which have faced trade sanctions due to their sensible medicine policies are Argentina, the Phillipines, Thailand, Israel, Pakistan, and India.

If you find this hard to believe, you can find the same information on the USTR’s own website. The USTR maintains a “Section 301″ list of countries which it is pressuring. This list includes actions taken against foreign countries for a variety of other reasons as well. To view the list, click here.
As stated above, these pressures are usually applied at the request of the pharamceutical industry, which donates quite a lot of money to “both” political parties. According to a study by Common Cause, the industry donated $18.6 million to campaigns (in PAC and soft money donations) between January 1, 1991 and June 30, 1997.

WHAT YOU CAN DO ABOUT IT
1. DOWNLOAD, COPY, AND DISTRIBUTE THIS PAMPHLET! It contains the same information about efforts to prevent people with AIDS from getting access to the medicines they need to survive. You will need Adobe Acrobat to read the document. To download a free copy of the software, click here.

2. Write to, call, email or fax U.S. Trade Representative Charlene Barshefsky Demand a change in policy. Point out that compulsory licensing and parallel importing are legal under the TRIPs agreement, and that the U.S. policy of pretenting otherwise is terribly unethical.

Charlene Barshefsky
U.S. Trade Representative
600 Seventh Street, NW
Washington, DC 20508
Phone: 202-395-6890
Fax: 202-395-3911
cbarshefsky@ustr.gov

3. Contact your Representative and Senators in Congress. Urge him or her to interfere with the USTR’s efforts to ensure that medicines remain prohibitively expense in developing nations. The main number to the House of Representatives is 202-225-3121 and the main number for the Senate is 202-224-3121. The operator will put you through to the office of any Representative or Senator.

Since the great majority of people afflicted with TB live in developing nations, news of the humanitarian crisis rarely reaches the majority of people living in the industrialized countries. The crisis, however, is well within our capacity to solve. A patient with Tuberculosis can be treated with a daily ration of four drugs which must be taken for a period of six months. This costs about $100. However, if the treatment is stopped before completion, or if some of the drugs are taken and others aren’t, the disease can evolve into a drug resistant strain. Treatment of multidrug-resistant tuberculosis (MDR-TB) is significantly more costly. Furthermore, proper treatment of regular TB has a nearly 100% success rate, while treatment of MDR-TB is considerably less certain.

The bottom line is that government and nonprofit funds are needed to stop the spread of TB before it mutates and spreads. The US government supports the fight against TB through the Center for Disease Control, the National Institutes of Health and USAID, but funding is minimal. According the the Center for Defense Information, Congress spent $1.461 BILLION in 1999 on military spending for equipment and programs that the pentagon DIDN’T EVEN WANT! If you quintupled TB spending, it still wouldn’t reach that level.

ACTION FOR CONCERNED CITIZENS

1) Let your local Congressman and Senator know that you feel funding for TB control and research should be a priority.
- Write letters to them
- Meet with them locally or in Washington, DC

* Sample letter to Congress on International TB Funding (click here)
* Contact information for your Congressman or Senator

2) Write President Clinton, urging him to make a major foreign policy statement on infectious diseases, including TB.

* Sample Letters
- TBI letter #1 to Clinton (on TB in general) – Clinton’s response
- TBI letter #2 to Clinton (on increasing research dollars for TB) – Clinton’s response
- Nobel laureate letter #3 to Clinton (focus on research for diseases that impact a large proportion of the world’s population)

* President Clinton’s Address:

President William Jefferson Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20501

3) COPY AND DISTRIBUTE THIS PAMPHLET

4) Contact groups working to stop the Tuberculosis crisis:
Affordable Medicine for All
Princeton Project 55′s Tuberculosis Initiative
The Public Health Research Institute

Priced at over $2000 per injection, the anti-cancer drug Taxol, sold by Bristol-Myers Squibb under the brand name Paclitaxel, retails at more than 20 times its production cost. The company claims high drug prices are necessary to make up for high research and development expenses. However, Bristol-Myers Squibb (BMS) didn’t develop taxol – the National Institutes of Health developed it with U.S. taxpayer funds.

The National Cancer Institute (NCI)- a division of the National Institutes of Health – began developing taxol in the 1960s. The NCI discovered the substance’s medicinal value, did all of the biological cell screening, chemical purification, isolation and identification, large-scale production and dosage formulation, and toxicology studies. It filed and documented an Investigational New Drug application with the FDA, and sponsored all clinical (human) studies of the drug. Then the NCI entered into a Cooperative Research and Development Agreement (CRADA) with Bristol-Myers Squibb. This granted the company exclusive rights to sell the drug. In return, the company agreed to provide the NCI with 17 kilograms of taxol. Experts believe that providing these 17 kilograms cost less than $5 million.
Bristol-Myers Squibb makes over $1 billion on Taxol profits annually.

It should be noted that taxol is only one example of a drug which was developed with taxpayer funds and then passed on to a corporation. It should also be noted that taxpayer funds (in the form of Medicaid) are often used to buy the given-away drugs back from the companies the drugs were given to.
A law passed in 1986 known as the Technology Transfer Act authorizes federal laboratories to enter into exclusive contracts with corporations, allowing the corporations to make and sell products – such as taxol – invented by the government. The government labs have effectively given away hugely profitable taxpayer financed inventions in the form of royalties or, more importantly, meaningful restraints on company pricing.

WHAT CAN YOU DO ABOUT IT?

1. DOWNLOAD, COPY, AND DISTRIBUTE THIS PAMPHLET! It is saved as a PDF file, so you will need the Adobe Acrobat Reader. If you do not have it, click here to download it for free.
2. Support the Affordable Prescription Drugs Act. This act would end the regular practice of handing out patents and exclusive licenses to companies for medicines developed by American taxpayer funds. If you want to see this legislation passed into law, contact your Representative in the House. Express outrage that YOUR tax dollars were used to develop important drugs that were then licensed exclusively to firms that are now free to charge ridiculous monopoly prices. Let your Representative know that you expect him or her to support legislation for the compulsory licensing of these medicines. Then contact your Senators and urge them to sponsor similar legislation. The number for both houses of Congress is 202-225-3121, and the operator can give you the phone number for any Representative or Senator.

Oxandrolone is one drug which is so overpriced it is rarely prescribed – even though it is inexpensive to produce. It was prescribed as a wieght loss drug in the 60s, 70s and 80s. By 1989, all patents on oxandrolone had expired, and the drug was available as a generic for 30 cents per tablet (5-10 mg). However, a company called the Bio-Technology General Corporation (BTG) discovered in the nineties that it could be used as an effective defense against HIV-related wasting, a leading killer of people with more advanced AIDS. Under a law known as the Orphan Drug Act, which exists to encourage the development of new drugs to treat rare diseases, the government granted BTG seven years of exclusive marketing rights for the drug. Once BTG had secured this artifical monopoly, it raised the drug’s price to $3.75 per 2.5 mg tablet – a price increase of over 1,200%. At the previously FDA-approved dose of 10 mg per day, oxandrolone now costs patients $15 per day or $5,475 per year. At higher doses of 40 or 80 mg per day, the annual cost would be or $21,900 or $43,800, respectively.

Whenever confronted about the high prices of drugs, pharmaceutical companies claim that high research and development costs justify these prices. Most AIDS drugs, however, were developed with tapayer funds (especially through the National Institues of Health). Here is a list of AIDS medicines developed with taxpayer funds. Furthermore, a recent report from AIDS Action,
Silence = $, shows that the 15 largest pharmaceutical compnies spend three times as much on advertising and administrative costs.

What can you do about it?
1. DOWNLOAD, COPY, AND DISTRIBUTE THIS PAMPHLET! It is saved as a PDF file, so you will need the Adobe Acrobat Reader. If you do not have it, click here to download it for free.
2. Support the Affordable Prescription Drugs Act. This act would end the regular practice of handing out patents and exclusive licenses to companies for medicines developed by American taxpayer funds. If you want to see this legislation passed into law, contact your Representative in the House. Express outrage that YOUR tax dollars were used to develop important drugs that were then licensed exclusively to firms that are now free to charge ridiculous monopoly prices. Let your representative know that you expectg him or hre to support legislation for the compulsory licensing of these medinces. Then contact your Senators and let them know the same thing. The number for both houses of Congress is 202-225-3121, and the operator can give you the phone number for any Representative or Senator.

The international AIDS crisis has hit especially hard in South Africa, where 3.2 million people are estimated to be HIV-positive. At the prices charged by American pharmaceutical companies, one year’s worth of AIDS medicine can cost roughly twice the average yearly income. Faced with a public health disaster, the South African government amended its Medicines and Related Substances Act to include provisions permitting the compulsory licensing and parallel importing of AIDS medicines. The U.S. government responded with threats of trade sanctions.

What is compulsory licensing?
A government pays royalties to a patent holder, and permits a third party to produce a patented good. This introduces competition into the market and can lower the price of medicine by 75% or more. Its specifically permitted under Article 31 of the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights, known as the “TRIPS Agreement.” It is a common practice among WTO Member countries, including the U.S.
What is parallel importing?
It is the import of a product from one country, and then the resale into another country. Drug prices vary widley in different parts of the world, so the savings can be dramatic. The practice is allowed under Article 6 of the TRIPS Agreement. Like compulsory licensing, it is commonly practiced by WTO Memeber countries. For a more thorough explanation of the legality and use of these both compulsory licensing and parallel importing, click here.

What was Al Gore’s role?
Vice President Al Gore is the U.S. Chairman of the United States/South Africa Binational Commission (BNC), which oversees economic diplomacy between the two nations. He was therefore responsible for the actions of the U.S. government in this particular trade dispute. According to a State Department report released Feb. 5, 1999, the Office of the Vice President was waging an “assiduous, concerted campaign” along with “all relevant agencies of the U.S. government” which included the Office of the U.S. Trade Represetative, the U.S. Patent and Trademark Office, and the State Department, to prevent the compulsory licensing and parallel importing of AIDS drugs in South Africa. South Africa was placed on the Trade Representative’s “watch list” for trade violations and made to undergo and “out of cycle review.” Tariff reductions were linked to the repeal of laws allowing medicine access. In one case, South Africa was warned that the mere act of discussing compulsory licensing at an international summit would be considered an illegal trade barrier.

What action was taken?
When Vice President Gore announced his candidacy for President in Carthage, Tennessee, AIDS protestors were waiting. From that day on, he was heckled again and again at campaign stops. The press began to catch on and publicize the issue. Here is Arianna Huffington’s story on the topic. As a candidate, he was especially vulnerable to the attacks. On September 17, the U.S. and South Africa reached an agreement where the U.S. pledged to sto interfering with South Africa’s efforts to implement compulsory licenses and parallel imports of AIDS drugs.

Furthermore, research and development done by the government tends to focus more on drugs of higher theraputic value and on drugs for treating life threatening or seriously debilitating diseases. Industry research, on the other hand, focuses primarily on treatments for less serious conditions, like allergies and baldness. It also focuses on so called “me too” drugs – medicines that are similar to drugs already patented by competing firms, but different enough to win new patents.

Policy makers in other countries have managed to lower the price of pharmaceuticals by allowing the compulsory licensing of them. This is a process where the government pays a royalty to the company which holds a patent on a product, and then allows another party to produce the product. This introduces competition into the market and drives the price down. In some cases, it can reduce the price by 75%.

There is currently legislation in the U.S. House of Representatives that would permit the compulsory licensing of medicines developed by taxpayer funds: The Affordable Prescription Drugs Act sponsored by Rep. Sherrod Brown. If you want to see this legislation passed into law, contact your Representative in the House. Express outrage that YOUR tax dollars were used to develop important drugs which were then licensed exclusively to firms that are now free to charge ridiculous monopoly prices. Let your representative know that you expect him or hre to support legislation for the compulsory licensing of these medinces. Then contact your Senators and let them know the same thing. The number for both houses of Congress is 202-225-3121, and the operator can give you the phone number for any Representative or Senator.