Patent Nonsense

Roche

Pharmaceutical giant Roche owns the license to produce Tamiflu and thereby exacts monopoly pricing by historically controlling the global supply through its single Tamiflu factory in Switzerland. Countries such as France, Australia, and New Zealand each have Tamiflu stockpiles expected to cover 20% of their national populations, at a cost of about 1% of their annual health budgets. An equivalent stockpile would account for 28% of China’s annual health budget, 54% of Cambodia’s, 67% of Indonesia’s, 75% of Vietnam’s and 173% of Laos’. “At the current prices,” the researchers who performed the calculations concluded, “it is unlikely that many countries will be able to afford it.”²³⁵⁹ Meanwhile, Roche is feathering its nest with windfall profits from the bird flu drug, with 2005 third-quarter group sales approaching $20 billion.²³⁶⁰

Roche is no stranger to price fixing. In 1999, the corporation pleaded guilty to a worldwide conspiracy to form a cartel to criminally “raise, fix and maintain” prices for vitamins sold in the United States and elsewhere. Roche was fined $500 million. According to the U.S. Department of Justice, this record fine was the highest criminal fine in history.²³⁶¹

Even if Southeast Asian countries had the money, there might not be much drug left to buy, thanks to the historic chokehold bottleneck of Roche’s single plant production. A case in point is the United States. It didn’t matter how many billions President Bush wanted to spend on stockpiling Tamiflu; there’s a waiting list for new orders and due to a delinquent delay in ordering its stockpile, the United States was towards the back of the line.²³⁶²

Roche won’t disclose its production capacity—even to the World Health Organization—deeming it “commercially sensitive” information.²³⁶³ The CEO told stockholders at an investors’ meeting, “We’ve never actually released what our capacity is, nor do we intend to.”²³⁶⁴ This has resulted in negative comparisons to Bayer, the maker of anthrax treatment Cipro. The U.S. government scrambled to stockpile Cipro after the anthrax mailings that followed the September 11th terrorist attacks, but Bayer initially refused to enter into reimbursement negotiations or disclose its production capacity.²³⁶⁵ In response, the U.S. government told the German drug firm that if it did not ramp up production and sell Cipro at a reasonable cost, the United States would bypass its patent and start making the drug. Bayer gave in, slashed prices more than 50% and started boosting production.²³⁶⁶ Governments around the world are now similarly threatening Roche over its monopoly on Tamiflu.

“It’s almost bordering on the immoral to have just one drug company to produce a drug that’s going to be a big part of the solution to avoiding the influenza pandemic,” said Philippine Health Secretary Francisco Duque.²³⁶⁷ A few U.S. lawmakers agree that the lives of potentially hundreds of millions of people should not depend on the efficiency and productivity of a single corporation. U.S. Representatives Dennis Kucinich and Marion Berry wrote Secretary Leavitt, “Compromising public health in order to preserve patent monopoly rights is inexcusable. We strongly urge you to immediately issue a compulsory license for Tamiflu…so that generic manufacturers can get to work shoring up our defense against avian flu.”²³⁶⁸ U.S. Senator Charles Schumer agrees. “Roche is putting their own interests ahead of world health,” Schumer said in a statement. “They should not be slow-walking this process when we have a potential pandemic that could occur at any time.”²³⁶⁹ The head of the nonprofit Consumer Project on Technology sums up such sentiment: “Public health should come first and the patent holder’s commercial interests should come second.”²³⁷⁰

“Something has to be done,” said the Emory University professor who created one of the two computer models showing that with enough Tamiflu quickly rushed to a burgeoning human outbreak, a pandemic could in theory be temporarily snuffed out at its source. “When you think of the potential damage a pandemic flu could do, and how little drug we have, the situation is quite absurd,” he said. “It makes sense to do something along the lines of what was done with AIDS drugs.”²³⁷¹ With millions in sub-Saharan Africa in desperate need of lifesaving AIDS drugs unaffordably inflated at $12,000 per patient per year, former U.S. President Clinton brokered a deal in 2003 to allow generics to supply the developing world at near cost, less than $150 per patient.²³⁷² Roche—French for “boulder”—refuses to yield on its monopoly. “Roche,” a company spokesperson said, “fully intends to remain the sole manufacturer of Tamiflu.”²³⁷³

Cipla, a Bombay-based leader in generic AIDS drug manufacture, claims to have perfected the process of manufacturing Tamiflu on its own. “My idea of a better-ordered world,” Cipla’s chairman told Forbes, “is one in which medical discoveries would be free of patents and there would be no profiteering from life or death.”²³⁷⁴ Thailand²³⁷⁵ and Taiwan also claim to have devised a method of mass production.²³⁷⁶ “We have tried our best to negotiate with Roche,” said the head of the clinical division of Taiwan’s National Health Research Institute. “[W]e appreciate their patent,” he said. “But to protect our people is the utmost important thing.”²³⁷⁷

Roche’s medical director for Tamiflu scoffed at the idea that such copycat manufacture would even be possible given the chemical complexity of their highly-secret production process.²³⁷⁸ Critics are skeptical. As one blogger commented, “I’ve never believed the ‘only Swiss gnomes can make it’ story.”²³⁷⁹ Indeed, Cipla says it has already started production, intending to sell at “humanitarian prices.”²³⁸⁰ “I have always said,” the chairman told reporters, “there should be access to medicine at affordable prices.”²³⁸¹

For violating corporate rights in an attempt to save millions of lives, Cipla and other generic manufacturers may face the wrath of Roche’s corporate lawyers if Roche chooses to fight them in court. An official Roche spokesperson declined to divulge whether they would do so, but said, “If we determine that there has been an infringement, we’d move to protect our rights and interests.”²³⁸² Roche’s hesitation thus far may be a reflection of its experience trying to sue South Africa for selling generic AIDS drugs. In 1998, 39 pharmaceutical companies, including Roche,²³⁸³ sued the government of South Africa—the country with the largest population of people living with HIV/AIDS—for circumventing patent protection of their profits.²³⁸⁴ The “patents versus patients” debate became such a public relations nightmare that Roche and the other drug giants dropped their lawsuit three years later and paid South Africa’s court costs.²³⁸⁵

Pharmaceutical companies argue that generic drugs undercut profits needed to spur new drug research and innovation. Industry spending on research and development, however, comes to only about half as much as is spent on marketing drugs²³⁸⁶ —sometimes even in the form of veritable kickbacks to doctors who prescribe them.2387 And most of the monopoly profits are spent on research used to create “me-too” or “copycat” drugs to grab market share by mimicking profitable competing drugs.2388 Only a tiny percentage of new drugs offer “important potential contribution to existing therapies,” according to a study published in the Journal of the American Medical Association; the vast majority were rated by the FDA as having “little or no potential contribution.”²³⁸⁹

“Big Pharma” is the most profitable industry in the United States.²³⁹⁰ According to Harvard Medical School’s Marcia Angell, the 10 pharmaceutical giants included in the Fortune 500 earned more profit than the other 490 corporations combined.²³⁹¹ It spreads its influence with more than 3,000 paid lobbyists, leveraging lawmakers with more than $800 million directly spent to influence public policy since 1998.²³⁹²

After the United States’ 2002 veto on Third World efforts to obtain cheaper generic pharmaceuticals, the editor of Lancet wrote, “Once again access to vital drugs to treat health emergencies among those living in poverty will be restricted solely to protect profit. And WHO has nothing to say on this issue.”²³⁹³ Similarly, when the Thai delegate at an executive board meeting of the World Health Organization proposed, in the spirit of the AIDS precedent, that poor countries at the front line of bird flu be allowed to override Roche’s patent to make affordable quantities of Tamiflu, the U.S. and French officials reportedly shut down the debate and effectively forced the meeting to adjourn without a vote.²³⁹⁴ Allegedly in return, Roche agreed to build a Tamiflu factory in the United States, but it may be years before the U.S. stockpile reaches adequate capacity.²³⁹⁵

In contrast, Kofi Annan, the Secretary-General of the United Nations, took a bold public stance in October 2005. “We should be clear in this situation,” he said. “We will take the measures to make sure poor and rich have access to the medications and the vaccines required…[by] making sure we do not allow intellectual property rights to get in the way of access of the poor to medication.”²³⁹⁶ Médecins Sans Frontières (“Doctors Without Borders”), a leading proponent of cheaper generics, called Annan’s comments a “very interesting political statement,” noting, “The UN has no legal power over patents, but national governments can set them aside, on a variety of grounds, including public health.”²³⁹⁷

Roche began to see the writing on the wall. Later that month, Roche announced that it would donate millions of courses of Tamiflu to the WHO.²³⁹⁸ Critics allege that this was done to appease the international community.²³⁹⁹ Quoting from an article about drug company tactics in the Journal of the American Medical Association, “No profit minded company would give gifts out of disinterested generosity.”²⁴⁰⁰

The move seems to have worked; the WHO has since been silent on the issue. The Director-General of the WHO explained: “When a company is doing its part, it is not a good incentive, encouragement [for the company] to do more.”²⁴⁰¹

Roche also agreed to start licensing the drug to other manufacturers to relieve some of the production bottleneck. Many governments complain, however, that the license fees have been set too high,²⁴⁰² and there is concern that this concession will still not come close to meeting the necessary massive global demand.²⁴⁰³ “So in a way,” social historian Mike Davis wrote, “the health of the whole world right now is held hostage to the corporate property rights of Roche.”²⁴⁰⁴

As a solution to the Tamiflu and vaccine shortages, Davis suggests that the federal government undertake the nonprofit development of lifeline medications, sidestepping Big Pharma.²⁴⁰⁵ The inventor of Tamiflu sister-drug Relenza claims that there are multiple formulas for new, inexpensive flu drugs gathering dust due to the historical lack of commercial interest. Preliminary testing shows one candidate potentially a hundred times more potent than drugs available today.²⁴⁰⁶ Bringing them to market, though, would be expected to take three to five years.²⁴⁰⁷ “[T]he repertoire of antiviral drugs,” the Institute of Medicine concluded, “is completely inadequate.”²⁴⁰⁸