James Love 
on Panel "Information Diversity"

Hi. My name is Jamy Love. I live in the United States and I work in Washington DC where I work for a consumer group. I work for Ralph Neither who is a in the United States basically the founder of the modern public interest consumer movement . I work in a small project called "The Consumer Project" on technology which is like engineeric name because we didn't know how to describe what I was doing around the office. So, I will talk a little bit about innovation, intellectual propriety and trade agreements. The first thing is that I'm gone through a little tour about pharmaceutical economic because I think that people in this conference seemed to be interested in economic models. I think it is sort of ironic that people that work on free software are fascinated with economics. But also it is not entirely ...Competition is important in the terminate prizes for medicine. This was the prize of Locanaso in Thailand in 1998 before and after they permitted competition for a drug called Locanaso. In this case Locanaso was used for treating tonalfungus, varginalfungus and AIDS related trash and cryptocokmengashites. Cryptocokmengashites was effecting about 10 percent of the AIDS patient in Thailand. There is offer a million effected people with HIV in Thailand. And it was really expensive. 200 bug was the local currency. I don't know the current exchange rate but it was to much money because this is like a daily dose that you needed to treat people. And within nine months after they permitted competition the prize fell at six and a half ball. It is around 25 real, about 25 cents in Thailand per day. So, at that point the product went from being not available to the general person. I mean the consequences of not treading Cryptocokmengashites so you go blind or you die. So, it is a very painful death as well. So, for the public health community this was a big revelation that public policy could led to really big, juge changes in terms of access to medicine. In this case which was pushed by NGO's Nick Round in Thailand really I think mobilised the AIDS community in 1998. 
Now this is another story. Brazil in 1996 started buying AIDS drugs or manufacturing themselves and it is the only place to developing (ro..) that guarantee the access to triple therapy for AIDS. And they cut the death toll in half in a short amount of time. So, that has been pretty effective. Now, when they first started to do it they were paying close to the branded prizes because not that many people knew how to make AIDS drugs and so in 1999 for example they were paying ten thousand dollars per kilo for the active ingredients of 3TC an important AIDS drug. By this year the market become more competitive and the prize fall about 700 hundred dollars a kilo. It was a decision by Brazil to go out and purchase generic drugs and create a competitive market. And what happened in this case is they were buying the active ingredients from India and from China primarily and possibly Korea in some cases. So they were creating this global market. This later this year let the big prize drops for AIDS drugs in Africa. A country that couldn't effort treatment. And that is a case where what Brazil did by transforming the market created basically a competitive system which benefited people outside of Brazil, so there is big external effects when purchase into a competitive sector. This shows you what happened in the last year for the prize... this is something I worked on quite a bit. The cheapest anti-reaktacocktail you can make involves Neverapin and 3TCand D4T. And it is a very good cocktail. It is called the judge Cameron cocktail in South-Africa because a member of the supreme court in South-Africa uses this cocktail. In the United States it is around 10.000 Dollars. I can by it right now for about 250 Dollars in a one pill presentation. I have a box of it right here actually. You take twice a day. it is one pill, three drugs twice day dose and it is probably the single best choice for the first line treatment. The donation prize by (Boringer, Kloxo and Bristemeyer ...) come down from ten thousand. But it is still about three times at what we can by the Indian product for. Now do drugs companies register patents in Africa? Next thusday there will be a publication in Jama that says that drug companies do not register very many patents in Africa. And we are involved in critic in that study but the basics is that some products are under patent and some products are not under patent. These are the most patented AIDS drugs in Africa. Combavir which is ACT and 3TC. 3TC which is a really important nuclear side. Noveravin a really important third drug for some reason Rosas patent Noveravin all over the place but... . What is important about these drugs - these are the number of countries where they are patented in Africa - if you have patents on this drugs you can block all of the cheap cocktails that you could make, all the simple one pill twice a day dose cocktails, all the cheap cocktails. So, these patents are not every AIDS drug but there are the once you want the most in an African context and they are the most important once to overcome. Where did they fail? They didn't fail everywhere. There is a lot of countries in Africa they didn't fail patents but the did fail in countries in Africa in Subsahara in Africa that have 83% of the GDP for the region and 68% of the patient. And if you can sell your generics products in the countries like Southafrica which by itself has 40% of the GDP for all of Subsahara in Africa you can get the economy ... just offer cheap products in the other countries. Now second lesson. Prize is very a lot for a lot of reasons, not just the patent story. So, this is a product of patent. This was a 95 survey that I just pull out to show you. And these are prizes in Canada, Thailand, Australia, UK, Indonesia, USA, Sri Lanka, just to show you how random prizes are. You get high prize, the orange bar are the brand name prizes, green are the generic . So you can see big differences between brand and generic for a product you know it is of patent. But also between countries like the Canadian prizes is fairly low. You can see the Indonesian, the Australian prizes are pretty high. It is just nothing really to explain in one way or the other how prizes are. That is not uncommon. This is another story about how important distribution is. The orange bares are what the generic suppliers get in the United States for these four drugs. The green bare is what the drug store charges the consumer for the generic product and the red is what the drugstore charges the consumer for the brand name. Now if you got products that cost seven dollars wholesaling and you are paying ninety-eight dollars for it I think it tells you that there is some other factors other then patent which determine prizes and that has to do with efficiency at the distribution system. Now good idea for data base, good open source project I guess you know. Lots of group point better data on prizes, the best data bases IMS data base but it is very, very expensive. They charged me once 2.500 Dollars for a couple of docent numbers from Africa on prizes of AIDS drugs and then they told me I couldn't put in on my web page. So, NGO's have to go out and get their data by hand. Every time they have been an attempt to get WTO to put a database of prizes on the internet the United States government or the European blocked it on behave of the drug companies. So that be cool. Another database could be more disclosure about the actual litigation issues. I mean like you know countries could require as a condition of getting patent that if there's been litigation against a patent claim would that have to be disclosed and reported as a condition of having a patent. That is even explicitly direst in The Trips Agreement and I don't know anybody who does that but that would be a cool database. Because you know in pharmaceutical there is a lot times litigation in one country but it will be you know...nobody spend a million dollars to challenge it in another country or many million. I think I'm gone maybe give you a ... tour very quickly of trade issues because I wane start a little bit more about funding RND down the road. There is lots of different trade agreements that are out there. You all heard of the WT but there is original agreements, there is bioethel agreements. The most important the multilet agreement is the world trade organisation trip agreement and that stands for trade related aspects of intellectual property. Don't explain to me why it is trips but that's what it means. Now this is the first part of the trips agreement. It says that in implementing the WT agreement on intellectual property you can have more extensive intellectual property protection if you want to, but you can not be obligated to. So the trips is like a minimum and you supposed to be not obligated to go further, plus you supposed to be able to implement it within your own legal system in practise. That is the first principle of the trips agreement. Now this is a US law past in 1999 and it required the US government to report on the steps taken to negotiate the repeal suspension or termination of section 15C of Southafrican medical control substance submitment act. So this is the reality of the not-obligated countries. We are actually make it part of our law to change a very specific section of the Southafrican law. Little conflict in jurisdiction there. They think they are passing laws but they have to check with us first because it is against our law that they pass that low. This is the report that they fall there. They explain that this is a bigger mobilisation then the attack on Bin Laden. I mean we have all revelation the us government, department of state, commerce, patent trade mark office, united states trade representative of national security council, office of the vice president are engaged in the studious (conser...) compain to persuade, PERSUADE the government of Southafrica to withdraw a modify previsions of 15C that we believe are inconsistent with WTO agreement. Now this is also a point where what Southafrica did was to consistent with the trade agreement because if they were inconsistent we could have taken them to the WT, but we knew we would lose so we just say it is inconsistent for just sort of cover up the billion thing because it makes it better to sound like you are enforcing the law then twisting or breaking somebody legs. A lot of this is just I think dishonest use the language here. This is where we brought a trade action against Southafrica for permitting the doctors to go to world health organisation and talk about whether the level of intellectual property protection in the WT agreement is appropriate. Now you can understand that currently in Southafrica more then half of the pregnant women in their twenties are testing positive for HIV. Now I have to ask you if that was happening in the country that you lived in and your people where you lived couldn't effort medicine is it conceivable that you might race the issue about patent rights in a medien of doctors but if you do you can face a trade section. And this case surely after this report was issued the minister of health was threw from a panel of AIDS that she was going to be on with the United States minister to sort of back down a little bit. That is the kind of detail that the United States puts into its straight policy. This was a success. We actually changed the US trade policy someone because we educated a variety of people. Now, I wane sort of give the European Commission a little bit of credit to. This was a memo. They wrote when we were discussing this issue about whether public health should be important and they said refering to this resolution in the world health organisation they said the draft resolution was subject of our considerable concern among the pharmaceutical industry IFPMA, International Federation of Pharmaceutical Manufactories and the European Federation of Pharmaceutical Industries and in some EU member states and like-minded members like United States and so. They discussed that with a hundred and thirteen deputies meting in Brussels and they concluded that no priority should be giving to health over intellectual propriety considerations, in particular enlighted the absence of many evidence of conflict between the two. The European Commission forbid any member of the European Union for voting in favour of a resolution in May 1998 at the world health assemblies saying that health care should have primarily role over commercial interest in trade policy because as they said there is no evidence there is any conflict. That is the European Commission. 
What is compulsory licence. A big part of what is going on internationally is a campaign by NGO's to introduce systems of non voluntary licence of intellectual property as it relates to medicine. Why it is important? Because it can introduce the competition of lower prizes. And it is also important because you can prevent patent owner from blocking RMD or the development of a new product. Now a big part of the medicine is that there is all kinds of things that are patented in our days including what they call research tools or lets talk about patenting genes or patenting mice or all kind of things. So these things are creating all kinds of problems. And so the ability to step in and require people to engage in reasonable license terms is quite important not only to protect the consumers , but to protect the big pharma companies, so they can actually develop products. Now I'm not gone go through all these things but in the North we do quite a bit of compulsory licensing. We just did 178 licences of the 3D systems in another company in the september in the United States. We are trying to do one now for Exsone to get access to the Unico patents on clean fuel. We have a proceeding about patents and interacting television, pretty important. This is for like I think for TV guides patents with totrak patents. We do a lot of them. But we don't really want these African countries issuing patents on AIDS medicine because that is about the precedent. Now, one thing that people look at now is whether the whole exclusive rights model, the patent model which is the all system is a durable concept in intellectual property. If we have to think about non-exclusive models for intellectual property and so we are quite interested in the idea that if you are just trying to protect investment you can have perhaps a better system then the exclusive rights system that comes out of patents which is sort of based on an older idea of one inventor, one invention that kind of thing. When you have hundreds of patents or docent of patents on the same invention and lots of problems consolidating intellectual property rights you have to wonder if you can do better. One thing we looked at recently is this insecticide, fungoside, rodeside act because that is a system where if you wane use the data that they file with the government on these things and you can't get a licence in 90 days you have an absolutely right to go into and buy an arbitration to get an license to use the data. And so it is an automatic sort of licencing model in the United States, not for patent but it is a similar intellectual property model we are looking at. Now I'm talking about RMD. RMD is important and it coast money. How much do a company spend on RMD. According to the tax returns of the United States because there is a tax credit for RMD in the United States. In order to get the tax credit you have to report how much you spend to develop new products and if you ask the RS what they put on their tax returns they tell you. So it is 7,5 % of sales in the United States. Now the 7,5% that is the RMD part, its a green part in there. Not all that is maybe think you think of very important I mean some of that will be really break through interesting stuff and another thing will be what they call "me to drugs" or perhaps doing research that is not really on a high priority of a public health point of view. That is how we fund our RMD in the United States. We give ten dollars to the drug companies and they give us back about 75 cents on RMD. And that is one way to pay for RMD. That is not the only way. We also spent 20 Billion a year on NAH to. 
What it cost to develop a new drug? It cost lots but not as much you might think. There is another tax. I like to look at tax returns because it is independent. It turns out that we have program. We pay for half the cost of clinical trials. And so the companies have to report and I tell you what we spent. So they said in 1998 there is been a hundred-and-fifty-five million dollars on clinical trials. (Often...) drugs the in the United States that involve around two hundred thousand patience for less then single indication. In some years it represents about half the new chemical entities that are proofed and given you in the United States. So there are large categories of drugs. They are eighteen approvals in 1998 for twenty indications. So that was about eight point six million per product before the tax credit. That includes the once that don't get a prove because you get the tax credit whether the product is successful or unsuccessful. And I think the 8.6 million dollars per product is lot lower then most people think. And then the government of course through the tax credit pays half for that. Now I'm not saying this is the average cost to doing clinical trials because the (orphans) maybe they have in a lot of cases smaller numbers of patience in a clinical trials. But it does show that you can develop a drug and get in on the market and doesn't cost that much to run through the FDA. Although in some cases it probably cost tens of millions of dollars just for the clinical work. These are the cost for protease and (habitats) that we estimated. The orange costs is what we think the current market radars for getting AIDS drug tested and then if you wane to triple that or not triple but to look at the highest per patient cost we have ever seen in an AIDS trial by the NAH which is ten thousand dollars per patient for a big trial you sort of get this range, so it would be like four to somewhere between two and sixteen million dollars per product depending on how you calculate it. 
Pre clinical research I think is the hard thing. It is knowing what to put in to a person in the first place. That is really difficult, risky and costing and that is sort of the interesting. In fact there is no much doubt on that but a lot of money sis pend on that. And how do you fund RMD? Well, one idea is you should have copyrights on RMD. I guess the positive things are that you don't have to have congress of propriet money or the parliament of propriet money. You have decentralised decision making and then you have entrepreneurs being independent risk takers. Disadvantages: I think Jim talked about this things you've to much secrecy, ethical concern over prizes, you have burgling failures that can bloke product development, under investment, public health priorities and you could probably add a lot to both top and bottom there. Tax insending is another way. Companies are always looking for some kind of a special tax treatment. Advantages again decentralised decision making. Disadvantages: Nobody really knows where the money is going because the tax returns are secret. And you have the intellectual properties rights, if the government is paying like the are doing in the orphan drug thing, we are paying for half the cost the clinical trials but we got none of the intellectual property rights, and the subsidy are contrary to free trade principles. If you are in an Indian drug company competing against Glaxa or the African market and the British government is paying half the cost of the drug as a subsidy through a cash credit to you know what is worth you gone propose in the England or the United States has proposed the same thing then the Indian company has a hard time competing on a fair ways. So it's runs contrary to this kind of liberalised trade ideas or efficiency principles. You have public and donate funding, you have advantages: research can enter the public domain. You know the donors can obtain either rights some kind of intellectual property rights. And you have got better control over the priorities and things. You might have some non-market varies associated with it like bureaucratic inefficiency for things. We like to look for the mix mode. What we are quite keen on like mandates which is a kind of a different kind of idea, not as the idea that you would actually just say as a condition of selling a product you'd have to invest in RMD to enter the market and have money to go into a RMD typed fund. I wrote a paper called 'Curts and sticks' on this for the "Medicine Sans Frontiere) and this is now we do some research on. The Zimbabwe proposal was discussed in August in Zimbabwe in Harary and it is that countries in Africa adopt a system of compulsory license in a patents. And the money from the royalty been paid into an RMD fund in Zimbabwe. And the patent owner just get sharing the fund. He doesn't get money directly. He does get like a little certificate, so if you have a share and then you know the fund investor incert of relevant healthcare projects in Zimbabwe and if there is some big discovery then the patent owner get a share of what ever profits they get of that. That was the idea to sort of move the money from say you know Europe or the United States down into African countries to do more research there, more capacity built in there and provide less of a (brandery) in situation there. I like that idea. We'd like to get trade agreements change from above property rights to increase innovation. We think property rights are means not an end. And we switch that around so that innovationcy is the point. And we like the idea of sort of looking at the births of sharing RMD as the main thing for a trade agreement not the particular form it takes. And I think that Tim alliterate but maybe didn't discus I think because he could because he played a big role in this. The Clinton/Blair agreement on... or he probably would describe as a (sanger), an H agreement or whatever. Founding the sequence in the gene that was kind of a trade agreement. Two countries agreed to put government funds in to prevent in some private sector investor from actually inventing something and getting the patent. They wanted the public to do it first to sort of..

Tim Hubbard: No public funds in the UK.

James Love: Oh donate funds, welcome trust funds, the donor and government money sort of prevent the private sector, so this was sort of a story the idea was to have a trade agreement not to get patents and to put something into the public domain. That was a sort of we thought got model for a trade agreement. And the GE, this is a big countries and they also talked about research and (...) that is an example of trade discussion involving market failure RMD. People talk about you know should everybody put there journals on the public domain. That is another kind of discussion you can have or look at other instruments. One of the models for technology transfer, should you have closures routinely to protect the poor, stuff like that and you wane built more capacity in the self. And this is our webpage. We have a discussion list about intellectual property and healthcare. So, you can go here if you wane learn about what we are doing on these issues. I'm not sure if I was able to tactual exactly the theme of the conference but O.k.

[transcript: Katja Pratschke]