Letter from Europe: Securing cheaper medicine

A conversation with Dr German Velasquez, special adviser for health and development at the South Centre


Shreerupa Mitra-Jha | April 23, 2015

As I stumble into Dr German Velasquez’s cozy office at the South Centre I am profoundly apprehensive of the ensuing reaction – I was after all half an hour late for my appointment in a country renowned for punctuality and watches. A new habitant to the Swiss lake city of Geneva, I had taken the wrong tram which took 40 minutes instead of the usual 10. “I am so sorry. I feel terrible,” I blurted as I gasped for breath. “No problem,” he said, “I was working on a document and fortunately I don’t have to go out today.”

Velasquez has the gentlest of demeanours which belies the iron grit he possesses, having taken on one of the most powerful lobbies in the world – the pharmaceutical industry – throughout his vie professionnel.

A Sorbonne-trained Colombian economist, he was the director of the World Health Organisation (WHO) Secretariat on Public Health, Innovation and Intellectual Property (IP), at the director general’s office but left it in 2010. During his tenure at this global health forum he was a leading critic of the pharmaceutical industry’s pricing policies and its denial of affordable drugs to poor countries.

Velasquez hogged international headlines when two unidentified men attacked him in Rio de Janeiro, slashing his arm, and left with a chilling warning, “Stop criticising the pharmaceutical industry”, when he was coordinating a WHO investigation into the industry’s pricing of life-saving drugs in developing countries.

A leading voice on the debate over health, intellectual property and access to medicines, Velasquez is now special adviser for health and development at the South Centre, an inter-governmental body of developing countries that promotes their common interests in the international arena. As part of his work, he routinely briefs ministers and diplomats on the current debates and negotiating loopholes before they congregate at the WHO ahead of important negotiating sessions.

“The real danger today is not so much the pharmaceutical industry anymore; it is the food industry,” he tells me with a professorial look.

I begin from the beginning – when the issue of access to medicines in poorer creases of the globe generated international debate, including in the WHO. The landmark South African struggle for securing medication for Africa’s 26 million HIV carriers through access to anti-retro virals (ARV) at affordable costs versus 39 pharmaceutical companies that had filed a case to block a legislation that allowed the government to manufacture or import cheap versions of the branded drug. The South African government won the case which was heralded as a historic victory for making drugs more affordable. I ask him about what was going on in the WHO around that time. After the South African victory, an association of persons living with HIV in Sao Paolo demanded free ARVs and influenced the Brazilian government to change the constitution, providing for free medication to them.

“At that time WHO was encouraging the use of condoms and saying ARV are too expensive which was a ridiculous position knowing that there were millions of people living with HIV. It’s been almost 15 years since the debate started in the WHO and outside. We have to give credit to several things that happened that time. Because of mobilisation of all the NGOs in the world the pharmaceutical industry failed and that was linked to the debate in WHO [at that time]. I think it was 1998 and the first World Health Assembly was on when at the last moment, Iran wanted an amendment to a resolution which took everybody by surprise but was passed [by the member-states]. The amendment made was very simple, that WHO should produce a report about the possible implications of the World Trade Organisation (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement on access to medicine. It was a classic resolution.”

TRIPS is a WTO-administered international agreement of 1994 that introduced the IP law into the international trading system and set minimum standards of regulations on IP applicable for all member-states. This came after intense lobbying from the developed countries, particularly the US, supported by the EU and Japan. There was much furore that strict IP systems would create havoc for public health in developing and least developed countries (LDCs).

Velasquez was, of course, at the forefront of that important development as an international civil servant heading the Public Health and IP department at WHO.

“It [The WHO resolution] produced the Red Book. It [The Red Book] created a big, big reaction, particularly from the US pharma,” he says pulling out a file to show me an original copy of the ‘Red Book’ and a letter from the US pharma against the document. The document clearly showed a negative impact of TRIPS on fragile public health systems in the less well-off countries.

“They sent a letter signed by this gentleman who is now an official at WIPO. The Red Book was 50 pages and the criticism from the pharma was 14 pages. The interesting thing is that the ‘criticism’ had insulting comments on the authors, rather than any criticism of the content. There was a reaction from the US government as well which requested the WHO to withdraw the document. At this important moment [Gro Harlem] Brundtland arrived in the WHO and sent it for review to three independent experts. And all three said the document was totally consistent and without factual errors. Like everything in Geneva there were a lot of rumours that time that WHO was going to withdraw the document.”

Brundtland after the review announced to reprint the document. The US government, having lost the battle in this round, came up with an interesting request. “The US government requested me to change the title and I refused. It is not honest to reprint the same document with a different name. At the end they requested me to change the colour of the book. It was an interesting casualty because the colour was chosen by my assistant as part of a series. They wanted a change in colour because the first print of the TRIPS agreement that was distributed to all delegations at the WTO was red.”

After many objections by developing nations, the Doha Declaration Agreement (DDA) of November 2001 stated that TRIPs should not prevent states from dealing with public health crises – there were flexibilities within the TRIPS agreement (compulsory licensing, parallel importation, limits on data protection, use of broad research and other exceptions to patentability, etc.) that nations could legislate to the extent provided for by the DDA.

Velasquez also represented the WHO at the WTO Council for TRIPS from 2001 to 2010.

“They [the Brazil and South Africa developments] were the two external issues that made WHO move – it had 10 health resolutions that insist on fully using the flexibilities [in the TRIPS agreement]. The first thing WHO was doing [then] was reviewing the national legislations and recommending to reopen the legislation and make sure all the flexibilities were included at the national level. Even if the TRIPS agreement gives room you have to reflect in the national legislation.”

Apart from the IP regime created by TRIPS Plus, many developed countries were engaging in higher standards of IP protection in bilateral agreements. “Developed nations are getting their way of bypassing the flexibilities in TRIPS through free trade agreements (FTAs) or bilateral agreements. Does WHO have a role in preventing that?” I ask.

“The second thing that we were doing in 2007 [apart from assisting developing nations review national legislations to include TRIPS flexibilities] was helping some countries negotiate FTAs around the issue. There were three countries in Latin America – Colombia, Peru and Ecuador – negotiating with the US.

There were more than 12 rounds of negotiations. At the end only Peru and Colombia signed. Out of the 12 rounds, in 10 rounds I was present advising them, as a WHO staff officially sent at the request of the member state. Of course, it was quite a delicate operation because the US is a member of the WTO as much as Colombia. There was an incident and they took us out of the negotiation but throughout the negotiations we were seated in the side room which officially came to be named as such. So, Peru would say, ‘we have to consult our side room’ [Laughs]. All this is to tell you the history that [WHO actively advised on FTAs and bilateral agreements which] stopped totally in 2010.

“Two or three WHO resolutions approved by the Assembly request WHO to give active advice to member-states not to go further [down] from the requirements in bilateral trade agreements being negotiated around the world. There is a mandate so we were there only filling the mandate. This mandate is still valid.

“But you ask the WHO [now] what their thinking is on the TPP [trans-pacific partnership] and they are totally silent, absent. They are not even attending the negotiations and not giving any advice. They are observers now.”

Pulling out a thick document Velasquez points out a page, “This document was published by three secretariats – WIPO, WTO and WHO in 2012. This report promotes access to medical technology and innovation. This is exactly what we are talking about, the intersection between IP, public health and trade. The report has a disclaimer: it says the interpretation and use of the material depend totally on the member state. They [WHO] are dissociating themselves totally from the text though it has much good content about WHO resolutions and TRIPS flexibilities. ‘We [WHO] are not advocating anything.’ That is a disaster because it is against the WHO mandate.

“Probably, its current with the WTO rules and mandate – they never did and probably are not supposed to do [protect public health] but it is not so for WHO.

The second thing that is surprising is that it is one of the very, very few documents from the UN that has no conclusion and no recommendations. No advice.

Only an analytical thing. Like a Facebook of the issue – you have a lot of material but at the end if any country wants to know what to do on compulsory licensing, there is nothing. In my opinion they are changing the way WHO has been operating. This report is a pity because WHO is working in the same way that WTO and WIPO work.”

India’s debate matters for the world

I ask what if the US is able to get India to change its patent laws. The National Pharmaceuticals Pricing Authority (NPPA), according to guidelines issued under the Drug Price Control Order, 2012, can fix prices of even those drugs that are not on the national list of essential medicines and till July of last year had 108 medicines whose prices were capped.

However, after prime minister Modi’s visit to the US, an Indo-US working group established a ‘high-level intellectual property working group’ which would have “appropriate decision-making and technical-level meetings as part of the trade policy forum”.

There is much talk even in America on the use of trade groups by the US administration to push policies for big pharma firms. Jamie Love, the head of Knowledge Ecology International, famous for being instrumental in getting ARVs made by Cipla into Africa, has warned that India would be under much pressure from the US administration to liberalise drug patents and to block or restrain the use of compulsory licensing – one of the TRIPS flexibilities that allows a government to use a patented pharmaceutical product or use a manufacturing process of a drug without the consent of the patent owner.

“We [Carlos Correa, Martin Khor and Velasquez] insist a lot that this is not an India issue but a world issue because if India changes the way it grants patents then it will influence the whole world. Africa will not have any access because 90 percent of the ARVs that Africa is consuming comes from India. If India tomorrow starts to grant patents as the EU does, then the market of generics will stop. This is not an ‘India’ debate but an international debate. Look at the ‘Novartis versus the Union of India and others’ case. It is a landmark case.

“Obama [administration] has gone totally against our expectations in this respect. Probably this [pharmaceutical lobbying] is a very tricky and national issue in the US. Remember that the [ObamaCare] bill was passed after very difficult negotiations with the pharma industry, probably with a lot of compromises. Some kind of [health] reform was done [in the US after the health bill] but that comes with a price because the foreign policy of the US is [now] supporting the [pharma] industry [in pushing its priorities offshore].”

I point out that the argument is that the TRIPS agreement by generalising the application of patents for a minimum duration of 20 years allows private drug companies to do expensive research funded by guaranteeing a monopoly through patents thus enabling drug companies to keep prices high.

“There are a lot of articles on that and they show that investment is more in marketing than in research. They are saying 10 percent to 12 percent [is invested] in research and around 20 percent in marketing. There is very little transparency. We don’t know at all what the real cost of the research is. You cannot talk of prices without knowing the real cost. And 20 years is given as patent protection by the TRIPS agreement in order to recover investment but if you don’t know the amount of the investment then it is a fake [estimate].

“[Take the case of] the famous drug for Hepatitis C from Gilead [one pill costs $1,000]. The sales in first eight months were $3-4 billion. It is very easy even for a child [to ask] do we need 20 years [to recover investment]? A Boston institute estimates that recovery for investment needs $2.5 billion, so Gilead does not need the remaining 19 years.

“The Drugs for Neglected Diseases Initiative (DNDi) says that the cost for research on a new drug is $100-$150 million. So what is the real cost – from $150 million [as per DNDi] to $2.5 billion [as per the Boston institute]? We have to clarify before we move to prices, royalties, compulsory licensing or even voluntary licensing. I have asked so many times when I was in the WHO as to why it can’t enter into analysing the real cost.”

But the private sector has to make profits, an argument often offered by the pharma industry. “They have to make profit, they are a private industry, but we have to make sure that the profits are in certain way in the same level as all private manufacturing goods marketed around the world – any commercial good that is a profitable one – but you have an industry that is making 10 times the profit of the most profitable industry. That is something wrong. We don’t have the tools to know what the real profits of this industry are because of the complexity of the market. They are playing with the monopolies not only by IP rules but also by therapeutic classes because if you have an anti-cancer drug it is not comparable with ARV. They are different types.”

More dangerous outside the system

Why did he leave the WHO? Would he not have made more of a difference if he was still in the system? Velasquez smiles and says, “In my last four or five years, I felt my room [within the system] was [getting] less and less. I sometimes spent more time convincing people inside the WHO than supporting developing countries. The ambassadors [from developing countries] said, ‘don’t worry, we support you’, but WHO was becoming less and less independent.

“On the issue of the H1N1 [epidemic] I was advocating that if a pandemia is announced, in my opinion, as a person responsible for the IP issue, I am absolutely convinced that WHO should advise that any product related to health technology in the pandemia has to be in the public domain. They [WHO] refused. I put it in writing. They decided not to invite me in the task force and I realised I was irrelevant here.

“At the last moment, the DG [Margaret Chan] realised that probably it was a little more dangerous to have Velasquez out [of the system] than Velasquez in [the system] because when I was in, I was reporting to her, and followed the structure. Now I am totally free and they are seeing the results,” says Velasquez.




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