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Subject: [Ip-health] Essential Inventions, Inc. Statement at WHO CIPIH
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http://www.essentialinventions.org/policy/eii-cipih.pdf

        Statement of Essential Inventions to the
 Commission on Intellectual Property Rights, Innovation
                    and Public Health

                      April 5, 2004

1. Introduction
2. Policy Objectives for Finance Mechanisms
3. The current system of financing R&D can be criticized
for being morally repugnant, economically inefficient,
and corrupt.
 a) It is morally repugnant to rational access to
 treatments.
 b) The current system is not economically efficient
   i)Expensive and not cost effective
   ii)Overly broad and excessively strong IP rights
impede follow-on innovation
 c) The current system is corrupt (on many levels)
4. Ritonavir
5. Compulsory licensing
6. R&D Mandates
 a) cisplatin
 b) HR 4270, 104th Congress
 c) The Ritonavir R&D mandate proposal
7. First best mechanism for financing R&D
8. Improving transparency and the evidence for policy
making
9. Open Medicine Initiatives
Attachments


1.   Introduction

Essential Inventions, Inc. (EII) is a non-profit
corporation organized under the laws of the District of
Columbia to “promote the creation and distribution of
essential inventions and other works that support public
health, nutrition, learning, and access to information
and cultural life.”  A case study of ritonavir is
presented that illustrates many of the problems in the
current system of financing R&D.  Mechanisms to address
abuses of patent rights will often involve limits on the
exclusive rights to market products.  Governments can
introduce R&D mandates to ensure that investments in R&D
are sufficient, making it possible to protect consumer
interests and promote efficiency, while increasing R&D
outlays and improving transparency and priority setting.

2.   Policy Objectives for Finance Mechanisms

The Commission should focus on the mechanisms that are
best to finance the advances in knowledge and innovation
that improve public health.  These mechanisms should be
evaluated on the basis of how they address legitimate
policy objectives, including those relating to:

    1.   Fairness.
    2.   The advancement of scientific knowledge,
    3.   Economic efficiency (cost effectiveness, appropriate
investment levels, efficient management, etc),
    4.   Public health priorities, and
    5.   Scientific, professional and political integrity,

3.   The current system of financing R&D can be
  criticized for being morally repugnant, economically
  inefficient, and corrupt.

  a)   It is morally repugnant to rational access to
     treatments.

It is morally repugnant to accept a system of financing
R&D that prices medicines far higher than the competitive
costs of manufacturing and distributing medicines.  The
majority of the world’s population lacks access to
important medicines.   Even in higher income countries,
high prices lead to rationing for the best new medicines.
As a consequence, useful therapies are routinely and
predictably not available to patients who need them.
This is morally repugnant precisely because it is
possible to embrace other methods of financing new
medicines that do not depend upon high prices and
rationing of access.

  b)   The current system is not economically efficient


     i)   Expensive and not cost effective

The current system of financing new medicines relies on a
mixture of public and private sector finance.  The WHO
TRIPS agreement is an R&D treaty, but one that focuses
exclusively upon patents and rights in data to finance
R&D.  IMS estimated the global pharmaceutical market to
be $491.8 billion in 2003, or more than 1.5 percent of
world GDP.  The global expenditures on pharmaceuticals
rose by 9 percent in 2003, far outpacing the growth in
incomes.

Experience suggests that competitive and efficient
distribution can routinely bring drug prices down by 95
to 99 percent.  This suggesting the cost of goods with
efficient procurement and efficient manufacturing might
be as low as $5 to $25 billion.   Even if the efficient
cost of medicines is much higher, say a fifth of the
current price tag, the cost of the monopoly would still
be nearly $400 billion per year, or about $63 for each
person on earth.  If global private sector R&D
investments are $60 to $75 billion (depending upon which
data are used), we are getting back only around $10 to
$12 per person in R&D.  And most of this is for products
that are not significantly better than existing
medicines.  Indeed, based upon US FDA data, an estimated
80 percent of R&D investment is spent on products that
are no better than existing products.1  In other words,
globally we pay $63 per person in higher drug prices to
finance R&D, but only get back around $2 per person on
private sector investment in products that have
significant health care benefits.  Moreover, next to
nothing of this is spent on treatments for diseases that
primarily afflict the global poor, such as malaria or TB.
Finally, private sector investments are focused more on
chronic treatments than on cures or vaccines.

There is also considerable evidence that a number of
commercial considerations that have little to do with
health care benefits often drive up the costs of clinical
testing, including for example the increasing tendency to
have marketing considerations influence the design of
clinical trials, and efforts to maximize the duration and
scope of marketing monopolies.2


     ii)  Overly broad and excessively strong IP rights impede
       follow-on innovation

IP rights are a tool to promote innovation, by attracting
resources to R&D.  But in many well-known cases strong IP
rights impede innovation by blocking follow-on
innovation.  In medicine, software and information
technologies, and in a number of other areas, innovation
is a cumulative, collaborative enterprise.  When
intellectual property rights grant strong exclusive
rights to use information or inventions, firms will limit
access to information, and restrict licensing of
technologies, in order to exploit market power in future
R&D markets.  The problems presented in this area have
been addressed in a number of expert reports and academic
studies, including for example the April 2003 report by
the Royal Society, “Keeping science open: the effects of
intellectual property policy on the conduct of science.”3
The following are some of the Royal Society conclusions:

     6.4 The enormous investment in biotechnology and
     software puts great pressure on patent offices to
     grant patent applications, but the new technologies
     are, as ever, testing the boundaries between
     discoveries (which are not patentable) and
     inventions (which are). The distinction is not
     always clear, particularly in developing areas such
     as biotechnology; yet scientific progress can be
     stifled if what are actually discoveries are judged
     to be patentable. Patents with a broad scope can
     also stifle follow-on research and development by
     others. Our key recommendations here reflect the
     need for patent examiners to take all necessary
     steps to be up-to-date in order to aid their
     judgement of novelty and inventiveness, and to be
     rigorous in applying the criteria for the granting
     of a patent application.

     6.5 Access to information is also increasingly
     constrained and needs to be improved.  Investments
     by publishers are, for example, protected by
     copyright law; this worked well when most
     information was stored on paper. Digital storage and
     transmission of scientific journals and books can
     permit cheap world-wide dissemination as desired by
     scientists and needed by science. Equally,
     publishers can see technology reducing their ability
     to get payment for their contribution. Recent
     copyright legislation has more closely met the needs
     of the entertainment industry than those of science,
     and difficulties now face the scientific community
     which has relied heavily on the ‘fair dealing’
     provisions of the copyright legislation to access
     information. We believe that learned societies
     should take a more proactive role in promoting more
     efficient channels for publication on a not-
     forprofit basis. Several of our recommendations are
     designed to improve access to scientific
     information.

     6.8 We feel strongly that those funding, organising
     and carrying out publicly funded research should
     ensure that resulting data are made readily
     available for use by all. It makes no sense to spend
     millions of pounds on research, the value of which
     is substantially diminished because some tens of
     thousands of pounds are not earmarked to support
     public databases that ensure full, easy and cheap or
     nocost access to allow science to progress rapidly.
     Private databases can be valuable, but they almost
     inevitably make access more difficult and they can
     lead to undesirable monopolies. Several of our key
     recommendations point the way to more effective
     rules and procedures to improve the value to society
     of both privately and publicly funded databases.

     6.9 Monopolies can develop where scientific
     information is protected by copyright, but are even
     more likely where a dominant position has been
     achieved using patents or database rights.
     Competition law is an overriding remedy, but it is
     best if restraints are such that it need not be
     applied.


  c)   The current system is corrupt (on many levels)

There are huge profits to be made from monopolies on
medicines.  Today a number of medicines generate more
than one billion per year in sales.  The key factors in
creating and maintaining monopolies on medicines are
sustained efforts to influence and shape the clinical
evidence on particular medicines, to change the way
doctors think about and prescribe medicines, to market
products directly to consumers (where legal), and to
influence government policies on regulation and
intellectual property rights.   The evidence of clinical
effectiveness is influenced by conflicts of interest,
doctors are manipulated and sometimes bribed to prescribe
products, advertising to doctors and to patients is often
misleading.  Big companies spend millions of dollars on
“echo chambers” for economists, and other experts and
phony NGOs who promote industry friendly views.  Millions
more are spend financing political campaigns, hiring
former government officials, lobbying governments and
parliaments.  Patient groups are given gifts and grants
in the expectation they will support or at least not
oppose high drug prices.  Public relations efforts seek
to shape public opinion on countless issues.   Firms
engage in many acts of fraud or manipulation of
regulatory systems, bad faith litigation over patent
rights, and undertake many anti-competitive practices.
Much of this is directly related to the financial
incentives firms have to protect and extend marketing
monopolies on medicines.

4.   Ritonavir

One timely example of the restrictions on follow-on
inventions concerns ritonavir, a drug used to treat AIDS.
Ritonavir was first developed by Abbott on a US NIH grant
as protease inhibitor, and was initially used as one of
three drugs in HAART therapy for AIDS.  Later, ritonavir
was seen as having beneficial use as a “booster” of other
protease inhibitors.   Abbott holds the patent rights on
ritonavir, and markets ritonavir as a standalone
treatment under the brand name Norvir, and as a fixed
dose combination of ritonavir and lopinavir, under the
trade name Kaletra.  In the economically important US
market, Abbott recently announced a 400 percent price
increase that only applies when patients buy ritonavir as
the standalone product, typically to “boost” non-Abbott
protease inhibitors.  Abbott has also reportedly refused
to license the ritonavir patents to other firms that
wanted to offer co-formatted fixed dose combinations of
ritonavir and other protease inhibitors.

The discriminatory price increase was clearly an effort
to protect or expand the market share of Abbott’s
Kaletra.  It will also have a very negative impact on the
R&D pipeline for new protease inhibitors, that would be
used in combination with ritionavir.  For example,
tipranavir, a Boehringer-Ingelheim protease inhibitor
still in development, needs to be boosted with 400
milligrams of Norvir/ritonavir.  After Abbott’s recent
price hike, the USA price of the ritonavir boost is more
than $16 thousand dollars per year.  This will destroy
Boehringer's market share for first line regimes, and
discourage Boehringer and other firms from developing
products that may be very important for "salvage"
patients, who have already developed resistance to
existing protease inhibitors.

Ritonavir is also expected to have utility as a booster
for drugs used to treat other diseases, such as cancer,
or possibly hepatitis, and efforts by Abbott to use its
patent rights in an anticompetitive manner may harm
public health for these diseases also.

Here it is important to note the huge public investment
in the development of ritonavir.  Not only has the US
financed many studies that were instrumental in advancing
the science for AIDS treatments, including the grants
made directly to Abbott that led to the invention of
ritonavir, but also in the continued development of
ritonavir as a treatment.  The US NIH CRISP database
lists 574 federal grants to study ritonavir.
ClinicalTrials.Gov recently identified 26 clinical trials
planned or currently recruiting patients that involved
ritonavir.  Of these, 21 were sponsored by US government
agencies, and Abbott was the sponsor of only one.  Four
were sponsored by other drug companies (including two
small firms).


5.   Compulsory licensing

In the case of ritonavir, the US government holds rights
in several essential patents, and as a consequence, the
US government may be able to exercise its “March-In”
rights under the federal Bayh-Dole Act and issue
compulsory licenses to the patents on the grounds that
Abbott has failed to make the patents “available to the
public on reasonable terms” 35 U.S.C. § 201(f).

Abbott has sought to limit the US government’s rights by
obtaining new patents on ritonavir.  In the US FDA Orange
Book, Abbott lists five US patents for the popular 100-
milligram gel tab of ritonavir.   The US government has
rights in the first four.  But US patent number 6,232,333
does not list US government march-in rights.   This
patent was granted more than five years after the FDA
approved ritonavir for sale.  The broadest claim for this
patent is the unremarkable “invention” that ritonavir can
be combined with a solvent for use in hard gelatin
capsules or soft elastic capsules.  It is probable that
this patent can be broken, because it is not novel, or
because there may be prior art.  But Abbott may seek to
exploit the opportunities that litigation presents to
“buy time” to block generic versions of ritonavir from
entering the market.  Today this scenario is quite
common, and firms routinely obtain trivial or poor
quality patents in order to expand and extend market
power, and prevent or delay competition, including
innovation in the same product space.

The US Federal Trade Commission has concluded a number of
studies and investigations into the anti-competitive
abuses of US regulatory and patent laws.4   In cases like
the ritonavir example, the US government would benefit
from the broader compulsory licensing authority that is
typical in Europe and most in other countries, so that
the US would not have to establish Bayh-Dole march-in
rights in every patent in a product before it could act
to protect the public interest.

Some countries have such laws in particular sectors of
the economy.  For example, the US has special compulsory
licensing authority for nuclear energy technologies and
for implementing the US Clean Air Act, and the European
Commission’s Biotechnology Directive provides for
mandatory compulsory licensing of follow-on innovations
involving genetically modified seeds.  But more general
compulsory licensing laws are also common.

Article 31 of the TRIPS sets out a number of rules
governments must follow if they authorize the use of
patents without the permission of patent owners.  These
rules generally depend upon the grounds used to justify
the authorization.  In cases of public non-commercial
use, the rules are quite liberal, with the exception of
restrictions on exports (limited to non-predominate
shares of output).   The only real obligation is to
provide “adequate” compensation to patent owners.  Public
non-commercial use includes situations where private
firms provide services or goods to governments.  The WTO
rules for public non-commercial use can also be extended
to purely private sector uses “in cases of national
emergency or other circumstances of extreme urgency.”
According to the November 2001, Doha Declaration on TRIPS
and Public Health, each WTO member may decide for
themselves “what constitutes a national emergency or
other circumstances of extreme urgency.”5

When the licenses are issued on general public interest
grounds, for use in the private sector, under non-
emergency situations, there is a general requirement for
prior negotiation with right owners on “reasonable
commercial terms and conditions.”6   Countries have broad
discretion in determining what are reasonable commercial
terms, since for every provision in the TRIPS, WTO
Members are “free to determine the appropriate method of
implementing the [TRIPS] provisions. . . within their own
legal system and practice.”7

Special and quite flexible rules apply when compulsory
licenses are issued as a remedy to anti-competitive
practices (which can be determined by judicial or
administrative process).  Not only is the requirement for
prior negotiation on reasonable commercial terms waived,
but so too are the restrictions on exports.8  This is a
very important provision in the TRIPS, and in fact is
fairly widely used, particularly in the United States, in
the area of information technologies, and also in
manufacturing or agriculture.

Related to the control of anticompetitive practices is
Article 40 of the TRIPS, which states in part:

     SECTION 8:  CONTROL OF ANTI-COMPETITIVE PRACTICES IN
     CONTRACTUAL LICENCES

     Article 40

     1.   Members agree that some licensing practices  or
     conditions   pertaining  to  intellectual   property
     rights  which restrain competition may have  adverse
     effects  on  trade and may impede the  transfer  and
     dissemination of technology.

     2.  Nothing in this Agreement shall prevent Members
     from specifying in their legislation licensing
     practices or conditions that may in particular cases
     constitute an abuse of intellectual property rights
     having an adverse effect on competition in the
     relevant market.

Finally, there are particular provisions in the TRIPS for
compulsory licensing in cases involving dependent
patents.9   These are actually more restrictive than the
general public interest grounds for issuing a compulsory
license.  In particular, Article 31(l) requires that “the
invention claimed in the second patent shall involve an
important technical advance of considerable economic
significance in relation to the invention claimed in the
first patent,”10 and provides that “the owner of the first
patent shall be entitled to a cross-licence on reasonable
terms to use the invention claimed in the second patent.”11
The European Biotechnology Directive generally follows
the framework of Article 31(l) for the mandatory
compulsory licenses on genetically modified seeds.

The compulsory licensing provisions in the TRIPS assure
that countries can override the exclusive rights of
patents in a wide range of cases, in order to protect
consumers, overcome anticompetitive practices, guarantee
that follow-on innovators have access to inventions, to
promote technology transfer, or for other purposes.


6.   R&D Mandates

Whenever governments consider compulsory licensing, there
are concerns that weakening of strong exclusive rights
will lead to reduced R&D investments.  This is also the
case for price controls, lessening of restrictions on
parallel trade, reform of the commonly abused patent
extension or marketing exclusivity mechanisms, or more
generally for nearly any provisions designed to promote
efficiency or to protect taxpayers or consumers.  The
public is often presented with a sobering and unpleasant
choice between innovation and access.

Governments need to embrace approaches that permit
governments to make finance mechanisms more efficient and
more fair at the same time.  R&D mandates are one such
approach that shows promise.

R&D mandates can be used in a variety of settings to
preserve or increase R&D funding in cases where consumers
benefit from lower prices.  For example, if the US
licensed parallel trade in medicines between the US,
Europe and Canada, but required the parallel traders to
contribute 10 or 15 percent of the price difference into
an R&D fund, the US could obtain lower domestic prices,
but still ensure that R&D funding was not reduced.  R&D
mandates could be implemented more aggressively,
including for example, to restore R&D to appropriate
levels when compulsory licensing is used to address
abuses such as excessive pricing of medicines.  An
important advantage of the R&D mandate approach is that
it is potentially a much cheaper mechanism to finance R&D
than the system that allows monopoly prices on essential
drugs.  Left to its own devices, the global pharma
industry now only reinvests a small fraction of sales
into R&D on new products.   Governments can mandate that
firms invest as much into R&D as policy makers specify.

Below are a few examples of R&D mandates.

     a)   cisplatin

In 1983, an R&D mandate proposal was made in connection
with cisplatin, a cancer drug invented at Michigan State
University.  When generic producers wanted to sell
cisplatin, Bristol-Myers (before Squibb merger) claimed
competition and lower prices would reduce R&D.  One
generic producer’s response to this claim was a proposal
for an R&D mandate on generic producers.   The generic
producer said that the government could require any
amount of R&D investment, and specify also who the
recipient of the funds would be.

A watered down version of the R&D mandate was eventually
implemented, not in connection with the entry by generic
producers, but in connection with a negotiation which
gave Bristol-Myers a 5 year extension on its monopoly, in
return for a 30 percent price decrease in prices, and a
$35+ million obligation to fund third party cancer R&D
(supervised by the NIH).  Later BMS would return to this
idea in 1997, and propose a 5-year extension of its Taxol
monopoly in return for a 6 percent R&D mandate on Taxol
sales (with half going to the NIH and half invested by
BMS).


     b)   HR 4270, 104th Congress

Also notable was the US proposal by Representative
Sanders in the 104th Congress (HR 4270) to require more
transparency of R&D, and to impose minimum R&D
requirements on companies that sell drugs in the United
States.  The contribution levels would depend on patent
protection, orphan drug status, and the magnitude of
sales.  The 1996 Sanders' proposal demonstrated how one
could make the overall level of private R&D investment a
matter of public policy, and also that policy makers
could do all sorts of things to protect consumer
interests, and not worry about overall R&D levels, since
there would be another mechanism (other than high prices)
to increase private R&D investments.

One particular approach is set out in the Sanders
proposal.

<---------------HR 4270-------------------------->

      HR 4270 , 104th CONGRESS, 2d Session

          To require reporting on research and
development expenditures for drugs approved for
marketing, and for other purposes.

         IN THE HOUSE OF REPRESENTATIVES
         September 27, 1996

[snip]

    SEC. 7. PROMOTION OF RESEARCH AND DEVELOPMENT.

            (a) ACCOUNT- Any person engaged in the
manufacture of drugs for introduction into interstate
commerce shall, in accordance with subsection (b),
establish for each drug an account for funds to be
reinvested in research and development for health care
technologies.

            (b) REINVESTMENT IN RESEARCH AND DEVELOPMENT-
To insure that adequate funds are being made available
for research and development of new health care
technologies, the Secretary of Health and Human Services
shall establish for persons engaged in the manufacture of
drugs for introduction into interstate commerce the
minimum amount such person should make available for
research and development of its new health care
technologies based upon a percentage of sales revenue for
that drug. The Secretary may require different
percentages for minimum reinvestment for different
classes of drugs based upon patient protection, orphan
drug status, or magnitude of sales.

            (c) ADDITIONAL RULES- The Secretary shall
adopt regulations concerning qualifying research and
development expenditures and the reporting requirements
for persons who are subject to subsections

  (a) and (b).

          SEC. 8. REPORTS ON SALES.

            Any person engaged in the manufacture and
sale of drugs approved under section 505, 507, or 512 of
the Federal Food, Drug, and Cosmetic Act shall report to
the Health Care Financing Administration the total number
of each drug it has sold and the total revenue it has
received from such sales, including sales made outside
the United States.

          SEC. 9. GOVERNMENT EXPENDITURE ON PRESCRIPTION
DRUGS.

            The Secretary of Health and Human Services
shall report to the Congress annually on the estimate of
the amount of money the Federal government expends,
directly or through reimbursement, for the purchase of
prescription drugs, including an estimate of the amount
of money expended each year on drugs which were developed
with significant Federal support.


<-------------END HR 4270-------------------->


     c)   The Ritonavir R&D mandate proposal

Essential Inventions, Inc. has asked Secretary Thompson
of the US Department of Health and Human Services (DHHS)
to exercise the US government “march-in” rights, and
issue compulsory licenses on patents on ritonavir.
However, because this would likely have some negative
impact on Abbott’s investment in R&D for AIDS, the
petition proposed a compensatory R&D obligation on
generic producers.  The R&D mandate proposal not only
proposed significant R&D contributions (about $300 per
year per patient), but also including the possibility of
more transparency for R&D, better priority setting, and a
social reach-through clause to ensure that R&D funded
from the mandate would not be subject to abuses of patent
rights.

<--------------Ritonavir R&D Mandate------------------->

7.2. Special obligation to finance R&D for new treatments
for AIDS.

We anticipate and share concerns that efforts to reduce
prices for this government-funded invention will reduce
profits to Abbott and consequently may reduce somewhat
private sector incentives to invest in research and
development.  We also recognize that large research and
development investments in advanced industrialized
countries, and in the United States in particular, are
needed to ensure access to new and better medicines for
the entire world.

Therefore, in addition to a royalty payment to the patent
holder, there should also be a requirement that producers
of ritonavir under the open license contribute to
research and development for new treatments for HIV/AIDS.
7.3. Cisplatin case as a model for funding AIDS R&D

The proposal that the open license contain a provision
that requires every manufacturer of generic ritonavir to
make an investment to a special fund for research for
HIV/AIDS is modeled after an earlier case involving
cisplantin, a cancer drug invented at Michigan State
University and marketed by Bristol-Myers.    After
Bristol-Myers enjoyed five years of exclusive rights to
market cisplatin, the federal government was asked to
permit competition. Bristol-Myers said that competition
would result in lower profits and less R&D.  One generic
manufacturer proposed that every generic manufacturer
contribute to an R&D fund, either managed by NIH or a
private non-profit party.   While the ultimate resolution
of the cisplatin case was a negotiated reduction in the
price of cisplatin and an agreement that Bristol-Myers
transparently fund approximately $35 million in third
party R&D on cancer, the proposal is revisited, as a
logical mechanism to permit competition and lower prices
while ensuring that R&D objectives are met.

The Secretary can decide if such an R&D requirement is
appropriate, and if so, how large the R&D contributions
would be, who would manage the fund, and how the
intellectual property rights would be allocated.  Here we
offer suggestions for alternatives the Secretary may
consider, which of course are subject to discussion and
further negotiation.

7.4. Mission of the fund

The mission of the fund should be to support drug
discovery based on novel scientific ideas that may not
receive adequate investment but for the presence of the
fund.

7.5. Required contribution to fund

We recommend that each manufacturer of ritonavir under
the open license should contribute to the fund a minimum
amount as follows:

1.   For the US and other countries designated by the
World Bank as High Income, $.004 per milligram.

2.   For countries designed by the World Bank as Low
Income, the minimum contribution is zero.

3.   For countries designed by the World Bank as middle
income, the minimum contribution should be $.004,
multiplied by the ratio of the country per capita income
divided by the average per capita income of the countries
designed by the World Bank as high income.


7.6. Management of the Fund
There are a variety of approaches that could be used to
manage the Fund, including but not limited the following
options:

1.   The NIH could manage the R&D Fund

2.   A private non-profit foundation could be identified
or created to manage the R&D Fund.

3.   A for-profit investment Fund could be created, with
shares allocated on the basis of contributions to the
fund.

7.7. Advisory board

Essential Inventions, Inc. recommends the Secretary
create an Advisory Board that would review how the R&D
funds were invested.   This board should include
representatives from the AIDS affected community and
experts in medical research.
7.8. Ownership of intellectual property rights

The Secretary could choose different approaches to the
allocation of intellectual property rights.  Essential
Inventions, Inc. recommends that commercial discoveries
be treated in one of the following manners.

1.   The inventions could be owned by the Federal
Government.  This approach might be particularly
appropriate if the Fund is managed by the NIH.
2.   The inventions could be owned by the investors in
the fund.
3.   The inventions could be owned by the original patent
owners.
4.   The commercial rights in the inventions could be
split evenly between the original patent owners and the
investors in the Fund.

Essential Inventions preferred approach is (4).

7.9. Reach Through March-In Clause
Essential Inventions, Inc. recommends that if options
(2), (3) or (4) or used, there also be a reach-through
clause that attaches the same rights the government now
has under the Bayh-Dole Act for March-In rights.

7.10.     Transparency of R&D

Essential Inventions, Inc. strongly recommends that all
contributions to the fund and all distributions from the
fund should be made transparent to the public through
appropriate means.


<----------END Ritonavir R&D Mandate-------------->


7.   First best mechanism for financing R&D

Are R&D mandates the first best solution for funding R&D?
Probably not in the format presented above.  A system
that more clearly separates the R&D and product markets
would better.12  In general, we need to introduce a global
treaty that mandates a minimum level of R&D effort for
every county, but which permits each country to
experiment and use the mechanisms to finance R&D that
work the best.

8.   Improving transparency and the evidence for policy
  making

It is essential that we have better evidence regarding
R&D outlays, the costs of drug development, and that we
know more about how R&D funds are spent, and what the
outputs are.

9.   Open Medicine Initiatives

The life sciences field is now experimenting with a
variety of “open medicine” initiatives, most notably open
databases and open academic journals, often justified on
the grounds that greater openness leads to better and
faster scientific progress.  Linus Torvald’s claim in the
software field that “with enough eyeballs, all bugs are
shallow” has resonated with medical researchers who
pushed to have the sequencing of the Human Genome be free
of patents and freely available to researchers globally,
as well as a diverse group of stakeholders who have
supported a plethora of other new “open medicine”
databases and journals.13  In launching the new Public
Library of Science Journal PloS Biology, Patrick Brown,
Michael Eisen and Harold Varmus explained the rationale
for a new publishing model for journals.  One
consideration was clearly to offer researchers a new
strategic model for reducing the costs of journals.  But
also, they were seeking to expand the usefulness of the
information.14

     Freeing the information in the scientific literature
     from the fixed sequence of pages and the arbitrary
     boundaries drawn by journals or publishers— the
     electronic vestiges of paper publication—opens up
     myriad new possibilities for navigating,
     integrating, “mining,” annotating, and mapping
     connections in the high-dimensional space of
     scientific knowledge. . . Consider how the open
     availability and freedom to use the complete archive
     of published DNA sequences in the GenBank, EMBL, and
     DDBJ databases inspired and enabled scientists to
     transform a collection of individual sequences into
     something incomparably richer. With great foresight,
     it was decided in the early 1980s that published DNA
     sequences should be deposited in a central
     repository, in a common format, where they could be
     freely accessed and used by anyone. Simply giving
     scientists free and unrestricted access to the raw
     sequences led them to develop the powerful methods,
     tools, and resources that have made the whole much
     greater than the sum of the individual sequences.
     Just one of the resulting software
     tools—BLAST—performs 500 trillion sequence
     comparisons annually! Imagine how impoverished
     biology and medicine would be today if published DNA
     sequences were treated like virtually every other
     kind of research publication—with no comprehensive
     database searches and no ability to freely download,
     reorganize, and reanalyze sequences. Now imagine the
     possibilities if the same creative explosion that
     was fueled by open access to DNA sequences were to
     occur for the much larger body of published
     scientific results.

More recently, some have suggested that the role of open
medicine can be expanded to address drug development,
making it also possible to address ethical concerns over
access to medicine.15


Attachments

January 29, 2004.  Essential Inventions, Inc., Petition
to use authority under Bayh-Dole Act to promote access to
ritonavir, supported by National Institute of Allergy and
Infectious Diseases contract No. Al27220

James Love, “Evidence Regarding Research and Development
Investments in Innovative and Non-Innovative Medicines,”
September 22, 2003.

Burton A Weisbrod, “Solving the drug dilemma,” Washington
Post. Aug 22, 2003:

Hubbard and Love, 2004. A New Trade Framework for Global
Healthcare R&D. PLoS Biology 2 (2):147-150

_______________________________
1 James Love, “Evidence Regarding Research and
Development Investments in Innovative and Non-Innovative
Medicines,” September 22, 2003.
http://www.cptech.org/ip/health/rnd/evidenceregardingrnd.
pdf
2 Robert Langreth, "Drug Marketing Drives Many Clinical
Trials," Wall Street Journal, November 16, 1998.   See
more generally, “Evidence Regarding Research and
Development Investments in Innovative and Non-Innovative
Medicines.”
3 Available on the web here:
http://www.royalsoc.ac.uk/files/statfiles/document-
221.pdf
4 See, for example: To Promote Innovation: The Proper
Balance of Competition and Patent Law and Policy.   A
Report by the Federal Trade Commission, October 2003
5 Paragraph 5(c).  “Each Member has the right to
determine what constitutes a national emergency or other
circumstances of extreme urgency, it being understood
that public health crises, including those relating to
HIV/AIDS, tuberculosis, malaria and other epidemics, can
represent a national emergency or other circumstances of
extreme urgency.”
6 Article 31(b).
7 Article 1(1).
8 Article 31(k).   “Members are not obliged to apply the
conditions set forth in subparagraphs (b) and (f) where
such use is permitted to remedy a practice determined
after judicial or administrative process to be anti-
competitive.”
9 Article 31(1) of the TRIPS, which refers to cases:
     Where such use is authorized to permit the
     exploitation of a patent ("the second patent") which
     cannot be exploited without infringing another
     patent ("the first patent"),
10 Article 31(l)(i).
11 Article 31(l)(ii).
12 Burton A Weisbrod, “Solving the drug dilemma,”
Washington Post. Aug 22, 2003: A21., Tim Hubbard and
James Love, A New Trade Framework for Global Healthcare
R&D, PLoS Biology, February 2004, Volume 2, Issue 2.
13 Sulston, J., and G. Ferry. 2002. The Common Thread: A
Story of Science, Politics, Ethics and the Human Genome.
London: Bantam Press, Cukier, K. N. 2003. Community
Property: Open-source proponents plant the seeds of a new
patent landscape
(http://www.cukier.com/writings/opensourcebiotech.html).
Acumen 1 (3):54-60.
14 Brown, P. O., M. B. Eisen, and H. E. Varmus. 2003. Why
PLoS Became a Publisher. PLoS Biol 1 (1):E36.
15 Tim Hubbard, 2003. Human Genome: Draft Sequence. In
Nature Encyclopedia of the Human
Genome, edited by D. N. Cooper. London: Nature Publishing
Group.   Tim Hubbard and James Love in a series of
articles, including Hubbard and Love, 2003. Medicines
without barriers. New Scientist, 29.  Hubbard and Love,
2004. A New Trade Framework for Global Healthcare R&D.
PLoS Biology 2 (2):147-150, Hubbard and Love, 2004. We're
patently going mad. Guardian, 4th March 2004, 6. Also
available from
http://www.guardian.co.uk/life/opinion/story/0,12981,1161
123,00.html.




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