A2K

This is the latest draft of my written testimony for the May 15, 2012 Senate HELP hearings on S.1138, the Prize Fund for HIV/AIDS.

Some additional relevant data are available on the following pages

http://keionline.org/prizes
http://keionline.org/hiv

The World Intellectual Property Organization (WIPO) will convene the 18th session of the WIPO Standing Committee on the Law of Patents (SCP) from 21 May 2012 to 25 May 2012 (during the same week as the 65th session of the World Health Assembly). The agenda of the SCP is reproduced below.

read more

This was the 3,500 word statement of Senator Bernie Sanders during Senate HELP committee markup of the PDUFA legislation. The statement covers a lot of ground, and illustrates why consumer groups love Bernie Sanders, while making one wonder why other Senators have not been more supportive of the consumer protection issues that Sanders discusses. Here are some highlights:

• The proposal for a new extended monopoly for antibiotics and antifungal drugs is a "huge giveaway" that will lead to high prices and harm consumers.

read more

German pharmaceutical company Bayer AG has formally lodged a challenge against a landmark Indian ruling that allowed a domestic generic drug-maker to produce a low-cost version of an anti-cancer drug for the Indian market. The appeal was filed on Friday 4 May with India’s Intellectual Property Appellate Board.

Back in March, the Indian Patent Office announced that it had issued its first compulsory license to Indian generic drug producer Natco - a move that effectively ended Bayer’s monopoly over Nexavar, a drug that is used to treat kidney and liver cancer. (See Bridges Weekly, 14 March 2012)

Compulsory licensing is when a government authorises a party other than the patent owner to produce the patented product or process without the patent owner’s consent. The patent owner shall, nevertheless, be paid an adequate remuneration, taking into account the economic value of the authorisation.

“We will rigorously continue to defend our intellectual property rights, which are a prerequisite for bringing innovative medicines to patients,” Bayer spokesman Aloke Pradhan told AFP.

The Indian ruling “damages the international patent system and endangers pharmaceutical research,” Pradhan added.

Meanwhile, P.H. Kurian, the then-controller general of patents who issued the March ruling, told LiveMint - a business news website that partners with the Wall Street Journal - that “it’s Bayer’s prerogative to appeal against the order, and it can put its arguments before the appellate authority.”

Natco, for its part, has said that it has yet to receive a notice of an appeal. “We haven’t received any notice in this regard so far, and if the appeal comes up, we will be able to file a reply and will present our case in the hearing.”

It was not clear when the appeal would be heard as Bridges went to press on Wednesday evening.

India is the world’s third-largest pharmaceutical drug producer by volume; in 2011 the domestic pharmaceutical market reached a record US$12.2 billion in sales.

New Delhi only began issuing patents for drugs in 2005 in order to comply with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). WTO rules explicitly allow compulsory licensing as long as procedures and conditions set out in Article 31 of TRIPS are fulfilled. The 2001 Doha Ministerial Declaration on the TRIPS Agreement and Public Health further recognised that “each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.”

Original ruling

The Indian patent authority’s March ruling found Bayer’s version of Nexavar to be “exorbitantly priced and out of reach of most of the people.” The 62-page decision also indicated that the German pharmaceutical giant had not taken “adequate or reasonable steps to start the working of the invention in the territory of India on a commercial level and to an adequate extent.”

The ruling allows Natco to sell the drug at Rs. 8,800 per patient per month, or US$175 - a 97 percent price cut compared to Nexavar. The compulsory licence was granted to Natco until 2020; the Indian company is required to pay royalties to Bayer on a quarterly basis.

Compulsory licensing decision under scrutiny by trading partners

India’s landmark decision has not escaped the notice of its trading partners, with the Office of the US Trade Representative noting in an official report last week that it would “closely monitor developments concerning compulsory licensing of patents in India following the broad interpretation of Indian law in a recent decision … while also bearing in mind the Doha Declaration on TRIPS and Public Health.”

The Special 301 report, issued annually by the Office of the USTR, also urged New Delhi “to provide an effective system for protecting against unfair commercial use, as well as unauthorised disclosure, of test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.” (For more on the USTR report, see related article in this issue).

In the report, India was one of 13 countries placed on a “priority watch list” by Washington, a classification that indicates “significant concerns” in the area of intellectual property rights protection and enforcement.

ICTSD reporting; “Bayer challenges India cancer drug ruling,” AFP, 7 May 2012; “Bayer appeals against compulsory licence order,” LIVEMINT & THE WALL STREET JOURNAL, 5 May 2012; “UPDATE 1-India Cipla slashes generic price of Bayer’s Nexavar,” REUTERS, 3 May 2012.

The US has released its annual report listing countries that allegedly deny “adequate and effective” protection of intellectual property, placing over a dozen of its trading partners - including Canada, China, India, and Russia - on its “priority watch list.” While industry groups applauded the report, some civil society groups cautioned that it may have been too heavily influenced by industry lobbying.

The Special 301 Report - which is named after a section of the US Trade Act of 1974 - has been published every year since 1988, when amendments to the Omnibus Trade and Competitiveness Act made it mandatory. This year’s version was issued on 30 April.

“This year’s Special 301 Report is more significant than ever in light of recent US Government data showing that IP-intensive industries support as many as 40 million American jobs and up to 60 percent of US exports,” US Trade Representative (USTR) Ron Kirk said, referring to new statistics recently published  by the US Department of Commerce.

Thirteen countries were included in this year’s priority watch list, which flags the most significant concerns regarding insufficient IPR protection or enforcement. The countries named included Algeria, Argentina, Canada, Chile, China, India, Indonesia, Israel, Pakistan, Russia, Thailand, Ukraine, and Venezuela. A lower level watch list outlined 26 other US trading partners - including Mexico and some EU member states - whose IP policies, according to Washington, also merit attention.

Spain and Malaysia, which had both been on last year’s second-tier list, were removed from this year’s report after adopting new regulations to better protect IPRs, Washington said. Meanwhile, Ukraine moved back to the priority list after having been on the second-tier list in last year’s report, as a result of “serious and growing concerns relating to counterfeiting and rampant piracy, including piracy over the internet,” the Office of the USTR said in a statement.

China’s IP policies - a repeated point of contention between the two trading partners - also featured heavily in the report. One of the main concerns cited by Washington was Beijing’s “indigenous innovation” policies, which it argues “effectively coerce the transfer of IPR from foreign rights holders to domestic entities.”

Trade pacts useful enforcement tools, Washington says

The report also outlines the actions taken by the Administration of President Barack Obama toward effective protection of IPRs, including the negotiation of plurilateral trade agreements. In particular, it describes the proposed Trans-Pacific Partnership (TPP) as “a key initiative to advance the multi-faceted US trade and investment interests in the Asia-Pacific.”

The TPP “will include strong standards for the protection and enforcement of IPRs,” the report noted.

The document also calls the controversial Anti-Counterfeiting Trade Agreement (ACTA) “an important new tool to fight trademark counterfeiting and copyright piracy,” underscoring that the accord “will be implemented in a way that preserves freedom of expression, fair process, and privacy.”

Report sparks mixed reactions

As in previous years, the report drew a mixed response, with supporters insisting that the report is essential for the protection of US economic interests. Critics, meanwhile, argue that the document is too heavily influenced by industry groups, and that it wrongly pushes developing countries into adopting US-style IP policies and legislation that could be detrimental to their public policy objectives, particularly in areas such as access to essential medicines.

“The Special 301 process continues to be effective in gaining high-level attention from our trading partners - attention that is needed to redress intellectual property violations and market access concerns,”  Pharmaceutical Research and Manufacturers of America (PhRMA) said in a statement, a sentiment that was echoed by other industry groups.

Washington has sought “to reduce market access barriers that US pharmaceutical and medical device companies face in many countries, and to facilitate both affordable health care today and the innovation that assures improved health care tomorrow,” PhRMA added.

Similarly, Steven J. Metalitz - counsel to the International Intellectual Property Alliance - commented that the “USTR’s report signals strongly the Administration’s commitment to protect one of our nation’s most valuable assets.”

However, Rashmi Rangnath - from advocacy group Public Knowledge - criticised the report’s vagueness and the influence of industry groups,  arguing that the process “continues to force other countries to adopt particular legislation.”

Knowledge Ecology International (KEI) also noted that, “as has become tradition, the list of grievances and the 41 countries named on the various lists are largely driven by lobbying efforts of right holders.”

“The USTR Special 301 report continues to disparage countries for taking measures to restrain drug prices or limit reimbursements on new medicines,” KEI concluded.

ICTSD reporting; “Russia, China on top copyright pirates list again,” REUTERS, 30 April 2012.

A proposal for a binding agreement for research and development (R&D) to address diseases that disproportionately affect developing countries needs strong backing from the international health community, Nobel Laureate Joseph Stiglitz said at a seminar held in Geneva, Switzerland last week. The proposal is being featured in a new World Health Organization (WHO) report that will be reviewed during the annual meeting of the organisation’s decision-making body later this month.

The report was prepared by the WHO’s Consultative Expert Working Group on Research and Development: Financing and Coordination (CEWG).

The working group was established by the World Health Assembly in 2010, in the context of the implementation of the global strategy and plan of action on public health, innovation, and intellectual property (GSPA-PHI). The CEWG was given the mandate of examining current and proposed financing of R&D focused on diseases that disproportionately affect poor countries, along with diseases that occur in both developed and developing countries.

“Market forces will not lead to efficient technologies and affordable medicines” against diseases that disproportionately affect developing countries, CEWG Chair John-Arne Røttingen explained at the seminar, held at the Graduate Institute of International and Development Studies.

The report suggests that all countries should aim to achieve specified levels of public funding on health R&D relevant to the needs of developing countries, and that a financing system be established under the convention based on contributions by governments.

Such a convention, the CEWG argues, should focus on the development of health technologies for diseases that occur almost exclusively in poor countries - such as HIV/AIDS, malaria, and African sleeping sickness - as well as the specific needs of developing countries regarding more globally widespread illnesses, such as cancer and diabetes.

It also advocates for the de-linking of research costs from final drug prices through upfront public financing. Pharmaceutical companies have traditionally argued that significant R&D expenditures are needed to develop new drugs. In addition, the exclusive protection afforded by patents to pharmaceutical products is an important market mechanism that allows for the channelling of resources for future R&D on innovative products.

However, as acknowledged by the 2001 Doha Declaration on TRIPS and Public Health, while intellectual property protection is important for the development of new medicines, its effects on prices is also an important consideration as it can make products less affordable for poor countries.

According to the CEWG report, an R&D convention should not serve as “a replacement for the existing intellectual property rights system,” but should instead act as a supplementary instrument in areas “where the current system does not function.”

“Living in a profit-driven system means that research goes where the money is,” Stiglitz - who previously held the role of World Bank Chief Economist - said.

He also stressed the need for shaping a well-designed IP regime, given that “intellectual property does not lead to efficient allocation of resources” when it comes to R&D and “patents can be an impediment to innovation.”

Suerie Moon - Research Director and Co-Chair of the Forum on Global Governance for Health at the Harvard Global Health Institute, and a commentator at the event - argued that the implementation of the right to health is primarily a responsibility of governments and invited them to support a binding approach for an R&D treaty at the WHO. “Soft norms have not been enough,” Moon said.

Concluding such a convention could be a valuable opportunity for the WHO to reaffirm the organisation’s role in global norm-setting, she added, given that recent discussions on WHO reform have identified this area as one where the organisation has a unique role to play.

Kenyan Ambassador to the United Nations Tom Mboya Okeyo echoed this sentiment, noting that “what is needed is not the setting up of more Working Groups but to develop further the negotiated global strategy on Public Health Innovation and Intellectual Property into a Research and Development Convention within the context of WHO reform.”

James Love, director of Knowledge Ecology International, said that the WHO should consider broadening the scope of the proposed R&D treaty in order to address global health needs involving high-income countries.

For instance, he suggested, such a treaty could include funding more R&D for new antibiotic drugs or products for influenza pandemics, or to fund independent clinical trials to test products.

The CEWG report will be discussed at the upcoming World Health Assembly on 21-26 May. The organisation’s Executive Board will follow on 28-29 May.

ICTSD reporting.

On May 15, 2012, the Primary Health and Aging Subcommittee of the Senate HELP Committee will hold hearings on S.1138, the Prize Fund for HIV/AIDS.

COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS
Primary Health and Aging Subcommittee

HEARING NOTICE

Title: The High Cost of High Prices for HIV/AIDS Drugs and the Prize Fund Alternative
Date: Tuesday, May 15, 2012
Time: 10:00 a.m.
Place: SD-430

read more

"Roma locuta causa finita est" (Rome has spoken, therefore the case has been decided) was the maxim employed by medieval jurists to describe the absolute irrevocability of papal judgements in canon law. Today, in modern international trade law, the World Trade Organization's (WTO) Appellate Body fulfills a similar function as the international trading system's "Supreme Court". In the words of the WTO, "was established in 1995 under Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

read more

The WHO's Consultative Expert Working Group (CEWG) on R&D proposal for a new WHO Convention on health R&D has been widely praised by public health groups (See http://www.keionline.org/node/1399). The CEWG proposal for a treaty has also, at least so far, avoided much criticism from the pharmaceutical industry, even though it strongly embraces the notion of delinkage of R&D costs from product prices, open innovation, and technology transfer and capacity building in developing countries.

read more

The controversial Anti-Counterfeiting Trade Agreement (ACTA) hit a new roadblock last week, as ACTA rapporteur David Martin formally asked the EU Parliament to reject the accord due to its possible impacts on civil liberties, suggesting instead that the Commission look for alternative solutions for Europe to protect its intellectual property.

“The European Parliament cannot guarantee adequate protection for citizens’ rights in the future under ACTA,” Martin warned in his recommendation.

ACTA is a plurilateral trade pact seeking to strengthen global standards for the enforcement of intellectual property rights in order to combat counterfeiting and piracy.

For the EU, the pact will become legally binding when signed and ratified both by the EU as a bloc and by its 27 member states individually. The EU Parliament’s express consent is needed before the agreement is adopted.

Growing concerns about ACTA - including protests throughout the continent - led the European Commission to refer the pact to the European Court of Justice earlier this year, whose legal opinion on the accord’s compatibility with EU law is still pending (See Bridges Weekly, 22 February 2012).

Martin: ACTA may cause more harm than good

Earlier last month, Martin released a draft recommendation to the EU Parliament expressing the same concerns that he officially presented to the EU International Trade Committee (INTA) last week. The document cautioned against ACTA’s ambiguities with regard to individual criminalisation, the definition of “commercial-scale” counterfeiting and online piracy, the role of internet service providers, and the possible seizures of in-transit generic medicines.

“The intended benefits of this international agreement are far outweighed by the potential threats to civil liberties,” Martin stated in the recommendation.

However, Martin acknowledged that intellectual property is “the raw material of the Union” and recognised that “the problems which ACTA seeks to address are real and growing,” inviting the European Commission to come up with new proposals to protect European intellectual property.

Martin also mentioned the possibility of renegotiating the agreement and suggested that the Commission might be able to “go back to other contracting parties” to modify the present text of the treaty after a rejection from the Parliament.

Continued apprehension about agreement’s impact on internet freedoms

Martin’s recommendation followed an opinion by the European Data Protection Supervisor (EDPS) - an independent authority appointed by the EU Parliament and the European Council devoted to protecting personal data and privacy - which highlights various concerns about the implementation of some provisions of the treaty in the digital environment.

The EDPS underscored that the ACTA provisions regarding intellectual property rights (IPRs) enforcement on the internet “raise concerns from a data protection perspective [and] are highly intrusive to the private sphere of individuals.”

“The indiscriminate or widespread monitoring of internet users’ behaviour … in relation to trivial, small-scale not for profit infringement would be disproportionate,” notes the document, adding that such measures would also be in violation of EU law.

Meanwhile, Marielle Gallo, the ACTA rapporteur for the EU Committee on Legal Affairs (JURI), expressed her support for the pact and proposed that the EP give its consent. JURI is one of the four committees that is expected to submit an opinion to the INTA prior to the trade committee issuing its recommendation to Parliament.

“ACTA does not create new intellectual property rights for the Contracting Parties. In other words, that which is currently protected by European legislation remains protected; that which was not protected is still not protected,” Gallo stated.

The INTA has postponed its vote on a final recommendation to the EU Parliament until June to allow more time for discussions and let other committees draft their opinions. The final Parliamentary vote is expected to take place in July.

ICTSD reporting; “ACTA: reject and maybe renegotiate, says European Parliament rapporteur,” INTA, 25 April 2012; “Euro MP David Martin dismisses anti-counterfeiting treaty,” BBC NEWS, 16 April 2012; “EU privacy chief warns of internet spying threat,” REUTERS, 24 April 2012.

The USTR's 2012 Special 301 list was published on April 30, 2012. Below are some comments about certain portions of the Special 301 Report that concern access to knowledge and access to medicines.

USTR cites the "TEAM" approach to access to medicines

read more

Final Paper Time for the EU to lead on new innovation models_April 16 TIMES NEW ROMAN

Negotiations last week at the World Intellectual Property Organization (WIPO) over a legal instrument intended to protect traditional knowledge (TK) saw mixed progress. Though a draft text will be forwarded to WIPO’s General Assembly that includes some areas of convergence, various disagreements on the definition of TK, its beneficiaries, and the scope of a potential instrument marred the week-long discussions.

The 21st session of the WIPO Intergovernmental Committee on Genetic Resources, Traditional Knowledge, and Folklore (IGC) met from 16-20 April in Geneva, Switzerland.

The Committee was created in 2000 amid concerns by biodiversity-rich countries and indigenous peoples regarding the misappropriation of their genetic resources and associated traditional knowledge.

The IGC’s mandate was renewed last year at the WIPO General Assembly, with countries setting the goal of engaging in text-based negotiations to reach agreement on an international legal instrument(s) for the effective protection of genetic resources, traditional knowledge, and traditional cultural expressions. With this goal in mind, the first IGC of this year - held in February - saw members focus solely on genetic resources (See Bridges Weekly, 22 February 2012).

The IGC was also asked to submit texts to this year’s WIPO General Assembly, where members will consider progress made and decide on whether to convene a diplomatic conference (See Bridges Weekly, 28 July 2011).

“We probably won’t have a nice, clean text necessary to convene a diplomatic conference tomorrow,” Chair Wayne McCook of Jamaica conceded on Friday, urging delegates to think of innovative ways to advance the committee’s work in the future.

No agreement over definition of TK, beneficiaries of protection

Last year’s renewed mandate urged the Committee to advance negotiations at last week’s session on four key issues: subject matter of protection, beneficiaries, scope of protection, and limitations and exceptions.

To this end, discussions at last week’s meeting were based on the draft articles text prepared in two revisions by three facilitators from Canada, Colombia, and Egypt, respectively.

Member states were unable to find common ground on whether a definition of traditional knowledge should be broad in scope or more detailed and descriptive.

South Africa underlined the need to define TK as ‘dynamic and evolving’, given that “traditional knowledge changes in the passage from generation to generation.”

“If we remove the terms ‘dynamic and evolving’ it becomes a static, frozen concept,” added the South African delegate.

Bolivia, for its part, asked that TK be defined as ‘inalienable, indivisible and imprescriptible’, as TK “cannot be given away by indigenous people, it cannot be fragmented, it is a unit.”

Some developed countries, however, urged members to instead adopt a broader definition without descriptive terms.

“Increasing elements decreases the value of the definition,” Australia argued.

Differences also persisted over who should be the potential beneficiaries of protection under a potential TK instrument, with several members arguing against a proposal that would include individuals, families, nations, and other national entities as beneficiaries of protection.

The EU, for instance, highlighted that “references to families and individuals are ambiguous” and “nations should not be considered as beneficiaries.”

Other proposals spark disagreements

Developed countries asked for the insertion of extensive exceptions and limitations in the draft articles. In particular, the US presented a proposal by which national authorities may exclude from protection “diagnostic, therapeutic and surgical methods for the treatment of humans or animals” and “traditional knowledge that is already available without restriction to the general public.”

In addition, Norway presented a proposal for a disclosure requirement regarding any process or product related to TK in patent and plant variety applications. India welcomed the proposal, but considered it should go beyond patents and plant varieties to encompass all intellectual property rights.

WHO: link between TK and public health
During the session, a representative from the World Health Organization (WHO) highlighted the growing importance of traditional medicines, as well as their widespread use in Africa, Asia, and South America.

Noting the overlap in the work of the IGC and the WHO, the representative stated that an IP system for the protection of TK should not  “restrict access to traditional medicine to the detriment of efforts to further develop existing treatments, to develop new products or to provide access to such treatments.”

Indigenous participation

The IGC also discussed proposals to reform the rules of participation for observers and indigenous people groups in the committee.

During the last session of the IGC, indigenous groups staged a walk-out from the committee and avowed to withdraw their participation until member states “change the rules of procedure to permit our full and equitable participation at all levels of the IGC.” (See Bridges Weekly, 22 February 2012)

At last week’s meeting, member states agreed to a proposal by the Indigenous Caucus - a group of indigenous peoples’ organisations at the IGC - requesting that the Secretariat prepare an information document on the practical, procedural, and financial implications of greater involvement of indigenous peoples’ representatives in the work of the Committee. The information document is expected to be circulated for members’ consideration at the next IGC session in July, which will focus solely on traditional cultural expressions.

The WIPO General Assembly will review the IGC’s work in September.

ICTSD reporting.

In a landmark decision last Friday, Kenya’s High Court ruled that the country’s anti-counterfeiting legislation could potentially undermine access to life-saving generic medicines. Lawmakers will now have to reconsider the relevant sections of the bill to eliminate ambiguities between generic and counterfeit drugs.

The 2008 Anti-Counterfeit Act was approved by the Kenyan Parliament with the intent of prohibiting trade in counterfeit goods and establishing an Anti-Counterfeiting Agency. (See Bridges Review, June 2009) The legal challenge to the act began in 2009 with a lawsuit filed by three petitioners with HIV/AIDS.

High Court Judge Mumbi Ngugi found that the act fails to clearly distinguish between counterfeited drugs and generic medicines. The ruling affirms that this legislative misstep may lead to confusion, which in turn could hinder access to life-saving medicines, particularly for people living with HIV.

“The right to life, dignity, and health of people like the petitioners who are infected with the HIV virus cannot be secured by a vague provison in a situation where those charged with the responsibility of enforcement of the law may not have a clear understanding of the difference between generic and counterfeit medicine,” Judge Mumbi Ngugi stated in the ruling.

“The Anti-Counterfeit Act has, in my view, prioritised enforcement of intellectual property rights in dealing with the problem of counterfeit medicine. It has not taken an approach focused on quality and standards which would achieve … the protection of the petitioners in particular and the general public from substandard medicine,” Ngugi added.

Following doubts in July 2010 over the act’s consistency with the Kenyan Constitution on the right to life and the right to the highest standard of health, the High Court suspended implementation of the act’s provisions on counterfeited drugs until a decision on the case could be taken.

Last Friday’s ruling reaffirmed the suspension, underscoring that “there can be no room for ambiguity where the right to health and life of the petitioners and the many other Kenyans who are affected by HIV/AIDS are at stake.”

Health activists welcome decision

After the ruling, UNAIDS Executive Director Michel Sidibé declared that “the High Court of Kenya has upheld a fundamental element of the right to health.”

According to UNAIDS, 1.6 million people in Kenya live with HIV/AIDS; an estimated 743,000 Kenyans are eligible for antiretroviral treatment, of whom 539,000 are currently receiving it. Generic drugs are the most widely used medicines in Kenya.

“We must have both generic drugs and strong anti-counterfeit laws. Generic drugs give more people access to life-saving treatment - while anti-counterfeit laws keep people safe,” Sidibé added.

Several health advocacy groups similarly applauded the decision.  AIDS Law Project Executive Director Jacinta Nyachae - in a joint statement issued by Médecins Sans Frontières, Health Action International Africa, and the Kenya Ethical and Legal Issues Network on HIV and AIDS - welcomed the High Court ruling and underlined the possible ripple effect the decision could have on Kenya’s neighbours.

“Kenya is leading the way in protecting access to medicines and public health and we are watching the actions of the East African Community member states to see if they follow suit,” Nyachae concluded.

ICTSD reporting; “Kenyan court ruling upholds access to generic drugs,” REUTERS AFRICA, 20 April 2012.

In the United States Senate, the Committee on Health, Education, Labor and Pensions (HELP) is trying to move forward a bill titled the "Food and Drug Administration Safety and Innovation Act." Among other things, the bill would "amend the Federal Food, Drug, and Cosmetic Act to revise and extend the user-fee programs for prescription drugs and medical devices, establish user-fee programs for generic drugs and biosimilars," and address a number of other topics, such as extend the legal monopoly on antibiotic drugs by 5 years.

read more

MEP Margrete Auken (Greens/EFA)

MEP Peter Liese (EPP)

MEP Christel Schaldemose (S&D)

present

Opening up medical research data for an ethical and efficient EU policy

Wednesday 6 June 2012

Member´s salon private dining room, European Parliament

12:30 – 14:00

Crucial information about many medicines are kept secret. In consequence, doctors can face difficulty in choosing the safest and most effective treatment for their patients.  Is it ethical and efficient for the EU to allow essential medical research data to be shrouded in secrecy? Can the health of EU citizens be effectively protected with very little or insufficient access to clinical trial data concerning the safety and secondary effects of a drug?

As Director of the the Nordic Cochrane Center, Dr. Peter Gøtzsche states: “If commercial or academic success depends on withholding data that is important for rational decision making by physicians, patients and governments then there is something fundamentally wrong with our priorities in health care.”  

As the European Parliament considers the EU´s framework programme for research and innovation, Horizon 2020, and will soon discuss the EU´s Clinical Trial Directive, European lawmakers have a unique opportunity to lead the way toward opening up health-sensitive research data with the aim of ending wasteful repetition and the promotion of scientific transparency. More and more voices in the scientific community feel that data sharing would lead to tremendous benefits for patients, progress in science, and far more rational use of healthcare resources based on evidence we can trust.

Please register by sending an email to XXXX

Note! To get access badge to the European Parliament please include the following information: full name, date of birth, nationality, type of ID (passport, ID, driving license) and ID number.

 

Organised with support from

Trans-Atlantic Consumer Dialogue and Health Action International Europe

Opinion of the European Data Protection Supervisor
on the proposal for a Council Decision on the Conclusion of the Anti-Counterfeiting
Trade Agreement between the European Union and its Member States, Australia,
Canada, Japan, the Republic of Korea, the United Mexican States, the Kingdom of
Morocco, New Zealand, the Republic of Singapore, the Swiss Confederation and the
United States of America
THE EUROPEAN DATA PROTECTION SUPERVISOR,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 16 thereof,
Having regard to the Charter of Fundamental Rights of the European Union, and in particular
Articles 7 and 8 thereof,
Having regard to Directive 95/46/EC of the European Parliament and of the Council of
24 October 1995 on the protection of individuals with regard to the processing of personal
data and on the free movement of such data 1 ,
Having regard to Regulation (EC) No 45/2001 of the European Parliament and of the Council
of 18 December 2000 on the protection of individuals with regard to the processing of
personal data by the Community institutions and bodies and on the free movement of such
data 2 , and in particular Article 41(2) thereof,
HAS ADOPTED THE FOLLOWING OPINION:
I.
INTRODUCTION
I.1. The EU legislative process on ACTA
1.
1
On 24 June 2011, the Commission put forward a proposal for a Council Decision on the
conclusion of the Anti-Counterfeiting Trade Agreement (‘ACTA’ or the ‘Agreement’)
between the European Union and its Member States, Australia, Canada, Japan, the
Republic of Korea, the United Mexican States, the Kingdom of Morocco, New Zealand,
the Republic of Singapore, the Swiss Confederation and the United States of America 3 .
OJ L 281, 23.11.1995, p. 31.
OJ L 8, 12.01.2001, p. 1.
3
Commission proposal for a Council Decision on the conclusion of the Anti-Counterfeiting Trade Agreement
between the European Union and its Member States, Australia, Canada, Japan, the Republic of Korea, the United
Mexican States, the Kingdom of Morocco, New Zealand, the Republic of Singapore, the Swiss Confederation
and the United States of America, COM(2011)380 final.
Postal address: rue Wiertz 60 – B-1047 Brussels
Offices: rue Montoyer 63
E-mail : edps@edps.europa.eu – Website: www.edps.europa.eu
Tel.: 02-283 19 00 – Fax : 02-283 19 50
2
2. The Agreement aims at tackling the enforcement of intellectual property rights (‘IP
rights’) by developing a common approach to enforcement and facilitating cooperation
at international level. Chapter II contains measures in several areas of the law, namely in
the field of civil enforcement (section 2), border measures (section 3), criminal
enforcement (section 4), and enforcement of intellectual property rights in the digital
environment (section 5). Chapter III contains measures to improve enforcement
practices, and Chapter IV deals with international cooperation.
3. ACTA was adopted unanimously by the Council in December 2011 4 and signed by the
European Commission and 22 Member States 5 on 26 January 2012. According to
Article 40 of the Agreement, ACTA will enter into force after ratification by six
signatory states. However, to enter into force as EU law the Agreement must be ratified
by the EU, which means approval by the European Parliament under the consent
procedure for international commercial agreements 6 and ratification by Member States
under their constitutional procedures. The European Parliament’s vote on ACTA is
scheduled to take place in the course of 2012 in plenary session.
I.2. State of play of ACTA in the EU
4. Growing concerns have been expressed over the last months about ACTA 7 . This has led
the European Commission to announce on 22 February 2012 its intention to refer the
agreement to the Court of Justice of the European Union for an opinion 8 . Such
procedure is foreseen in Article 218(11) of the Treaty on the Functioning of the
European Union (‘TFEU’) 9 .
5. On 4 April 2012, the Commission decided that it would ask the Court the following
question: ‘Is the Anti-Counterfeiting Trade Agreement (ACTA) compatible with the
European Treaties, in particular with the Charter of Fundamental Rights of the
European Union?’. 10 In case the outcome would be negative, Article 218(11) TFEU
makes it clear that ‘the agreement envisaged may not enter into force unless it is
amended or the Treaties are revised’.
6. However, the referral of the Agreement to the Court of Justice by the Commission
would not automatically suspend the consent procedure currently under way in the
European Parliament. After discussion in the International Trade Committee of the
4
The text of the agreement, in its latest version of the Council of 23 August 2011, is available at:

http://register.consilium.europa.eu/pdf/en/11/st12/st12196.en11.pdf.

5
Germany, Cyprus, Estonia, the Netherlands and Slovakia have not signed it yet.
6
Pursuant to Article 218(6) TFEU.
7
See
amongst
others:

http://euobserver.com/9/115043;

http://euobserver.com/871/115128;

https://www.bfdi.bund.de/bfdi_forum/showthread.php?3062-ACTA-und-der-Datenschutz,

http://www.bbc.co.uk/news/technology-17012832.

8
Statement by Commissioner Karel De Gucht on ACTA (Anti-Counterfeiting Trade Agreement),

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/12/128.

9
Article 218(11) TFEU provides that ‘A Member State, the European Parliament, the Council or the
Commission may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible
with the Treaties. Where the opinion of the Court is adverse, the agreement envisaged may not enter into force
unless it is amended or the Treaties are revised.’ According to Article 107(2) of the Rules of procedures of the
Court of Justice, ‘[t]he Opinion may deal not only with the question whether the envisaged agreement is
compatible which the provisions of the Treaties but also with the question whether the Union or any Union
institution has the power to enter into that agreement.’.
10

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/354&format=HTML&aged=0&language=EN

&guiLanguage=en.
2
European Parliament, it was decided to proceed with the vote on the Agreement in
accordance with the planned schedule 11 .
I.3. The reasons for a second EDPS Opinion on ACTA
7. In February 2010, the EDPS issued an Opinion on his own initiative in order to draw the
attention of the Commission on the privacy and data protection aspects that should be
considered in the ACTA negotiations 12 . While negotiations were being conducted
confidentially, there were indications that ACTA would contain online enforcement
measures having an impact on data protection rights, notably the three strikes
mechanism 13 .
8. The EDPS at the time focused his analysis on the lawfulness and proportionality of this
type of measure and concluded that the introduction in ACTA of a measure that would
involve the massive surveillance of Internet users would be contrary to EU fundamental
rights and in particular the rights to privacy and data protection, which are protected
under Article 8 of the European Convention on Human Rights and Articles 7 and 8 of
the Charter of Fundamental Rights of the EU 14 . The EDPS furthermore underlined the
safeguards needed for international exchanges of personal data in the context of IP
rights’ enforcement.
9. Now that the text of the proposed agreement on ACTA has been made public 15 , the
EDPS considers it appropriate to issue a second Opinion on ACTA to assess some of the
provisions contained in the Agreement from a data protection perspective, and by doing
so to provide specific expertise that could be taken into consideration in the ratification
process. Acting on his own initiative, the EDPS has therefore adopted the current
Opinion based on Article 41(2) of Regulation (EC) No 45/2001 in view of providing
guidance on the privacy and data protection issues raised by ACTA.
II. SCOPE OF EDPS COMMENTS
10. The EDPS acknowledges the legitimate concern of ensuring the enforcement of IP
rights in an international context. However, while more international cooperation is
needed for the enforcement of IP rights, the means envisaged for strengthening their
enforcement must not come at the expense of fundamental rights of individuals, and in
particular their rights to privacy and data protection. The EDPS has therefore called
upon the European Commission, at the time the Agreement was under negotiation, to
strike a right balance between, on the one hand, demands for the protection of IP rights,
and, on the other hand, the privacy and data protection rights of individuals 16 . The need
for an appropriate balancing of rights in the context of IP enforcement was recently once
11
See http://www.neurope.eu/article/parliament-halts-sending-acta-court-justice.
Opinion of the European Data Protection Supervisor on the current negotiations by the European Union of an
Anti-Counterfeiting Trade Agreement (ACTA), OJ C 147, 5.06.2010, p.1.
13
‘Three strikes Internet disconnection policies’ or ‘graduated response’ schemes allow copyright holders, or
entrusted third parties, to monitor Internet users and identify alleged copyright infringers. After contacting the
Internet Service Providers (‘ISPs’) of the alleged infringer, ISPs would warn the user identified as infringer, and
he would be disconnected from Internet access after having received three warnings.
14
Charter of Fundamental Rights of the European Union, OJ C 303, 14.12.2007, p. 1.
15
See footnote 3.
16
See paragraph 10 of the EDPS Opinion of 22 February 2010 on ACTA.
12
3
again re-affirmed by the Court of Justice of the European Union on 19 April 2012 in the
case Bonnier Audio AB 17 .
11. As will be developed further below, the EDPS notes that the provisions relating to
enforcement of IP rights on the Internet raise concerns from a data protection
perspective. As said, the Court of Justice is asked to clarify whether the provisions of
ACTA are in line with the European Treaties, in particular the Charter of Fundamental
Rights. The analysis in the present Opinion takes a more focused perspective as it
assesses the compatibility of the Agreement only in respect of EU law on privacy and
data protection, and it also checks whether the provisions of the Agreement may open
the door to possible undue and unacceptable side effects on individuals’ privacy and data
protection if they are not implemented correctly. In other words, does the Agreement
give the right incentives for the legislators of the EU and in the Member States to take
the needs for protection of the right to data protection into account? The present Opinion
should in any event not be understood as pre-empting the advice of the Court of Justice.
12. Although this Opinion is focused on the enforcement measures set forth in the digital
chapter of ACTA, it also assesses other provisions of the Agreement where relevant. It
builds upon the analysis made in the previous EDPS Opinion on ACTA, which remains
fully valid in respect of the threats to privacy and data protection caused by the
widespread monitoring of Internet users and the safeguards needed for international
exchanges of personal data in the context of IP rights’ enforcement. It will therefore not
repeat in full the previous analysis but make reference to it where applicable. After
assessing the threats to data protection and privacy raised by the envisaged enforcement
mechanisms in the digital environment (section III), a more specific analysis of some of
the provisions of the Agreement will be conducted from a data protection perspective
(section IV).
III.   THREATS  TO  DATA  PROTECTION  AND  PRIVACY  RAISED  BY  THE  ENVISAGED
ENFORCEMENT MECHANISMS IN THE DIGITAL ENVIRONMENT
III.1. Measures foreseen in the digital chapter of ACTA (Chapter II, section 5)
13. Chapter II, section 5 of ACTA contains a number of measures aimed at facilitating the
enforcement of IP rights in the digital environment. Although these measures are
designed to help fight against all forms of IP rights infringements, including trademarks,
the protection of copyright is at the core of that chapter.
14. The digital chapter of ACTA contains two measures specifically designed for
facilitating enforcement of IP rights in an online environment, which contracting parties
have the possibility but not the explicit obligation to introduce into their legal system: (i)
a mechanism by which an online service provider may be ordered by ‘a competent
authority’ to disclose the identity of a suspected subscriber directly and expeditiously to
a right holder 18 , and (ii) the promotion of ‘cooperative efforts within the business
community to effectively address trademark and copyright or related rights
infringement’ 19 .
17
See Case C-461/10, Bonnier Audio AB, Earbooks AB, Norstedts Förlagsgrupp AB, Piratförlaget AB, Storyside
AB v Perfect Communication Sweden AB, judgment of 19 April 2012.
18
Article 27(4) of ACTA.
19
Article 27(3) of ACTA.
4
15. The first type of measure aims at ensuring the disclosure to right holders of the identity
of individuals whose behaviour is suspected to infringe IP rights online. Under such
mechanism, online service providers would be placed under an obligation to disclose
personal data of some of their subscribers to right holders if given criteria are fulfilled,
subject to the intervention and control of an authority.
16. The second type of measure is not as self-explanatory as the first one and it is unclear
what types of measures the reference to ‘promote cooperative efforts within the business
community’ entails. A recital in the preamble of ACTA is more specific in indicating that
such cooperation is desirable ‘between service providers and right holders to address
relevant infringements in the digital environment’. Many contracting parties in whose
territory certain types of voluntary enforcement cooperation mechanisms have already
been implemented between ISPs and right holders are likely to contend that these
mechanisms would fall under the scope of Article 27(3) of the Agreement. These
include various forms of voluntary enforcement cooperation mechanisms, such as three
strikes mechanisms, blocking and filtering of peer to peer traffic, or the blocking of
websites allegedly infringing copyrights.
III.2. Why are such mechanisms problematic from an EU data protection perspective?
17. The Internet facilitates the exchanges, in various manners 20 , of content covered by
copyright; some of these exchanges concern lawful exchanges of protected works while
others relate to unlawful creation and exchanges of content covered by copyright.
Amongst all IP rights, copyright is certainly the right whose enforcement on the Internet
raises the most challenges and privacy concerns, in particular in view of the large
number of individuals who may be affected by copyright enforcement measures directed
to activities carried out online.
18. Many of the measures that could be implemented in the context of Articles 27(3) and
27(4) of ACTA would involve a form of monitoring of individuals’ use of the Internet,
whether by detecting actual IP rights infringements or by trying to prevent any future
infringements. In many cases, the monitoring would be carried out by right holders or
right holders’ associations and third parties acting on their behalf, although they often
seek to delegate such task to ISPs 21 .
19. Measures that entail the generalised monitoring of Internet users activities are highly
invasive of the individuals’ private sphere. They are usually carried out unnoticed and
may affect millions of individuals or even all users, irrespective of whether they are
under suspicion. They may involve the monitoring of electronic communications
exchanged over the Internet and the review of the content of individuals’ Internet
communications, including emails sent and received, websites visited, files downloaded
or uploaded, etc. Furthermore, such monitoring usually entails the systematic recording
of data, including the IP address of suspected users. All this information can be linked to
a particular individual through the ISP, who can identify the subscriber to whom the
suspected IP address was allocated. It therefore constitutes personal data as defined in
Article 2 of the Data Protection Directive 95/46/EC 22 .
20
For example, through peer-to-peer networks, web download, streaming, etc.
This is particularly the case in the context of preventing infringements, where right holders have for example
required ISPs to implement filtering tools which involve the monitoring by ISPs of all users’ behaviour on the
Internet.
22
See also paragraph 27 of the EDPS Opinion of 22 February 2010 on ACTA.
21
5
20. As a result, these measures will often constitute an interference with individuals’
fundamental rights and freedoms, such as the rights to privacy, to data protection, and to
the confidentiality of communications, protected in Article 8 of the European
Convention on Human Rights and Articles 7 and 8 of the Charter of Fundamental Rights
of the EU 23 .
21. The lawfulness of specific enforcement measures that interfere with fundamental rights
and freedoms must be assessed in the light of the criteria set forth in Article 8(2) the
European Convention on Human Rights 24 and Article 52 of the Charter of Fundamental
Rights of the EU 25 . They require that any limitation is provided for by law and
necessary and proportionate to the legitimate aim it pursues. Furthermore, measures that
involve the processing of personal data must be in compliance with data protection law,
which, inter alia, requires that they are grounded on a valid legal basis.
22. As concerns the necessity of a specific enforcement measure interfering with one or
several fundamental rights, it must first be demonstrated how this measure responds to a
pressing need in society. It must furthermore be considered whether other less intrusive
alternatives are available or could be envisaged 26 .
23. The assessment of the proportionality of a specific enforcement measure must be done
on a case-by-case basis and in the light of fundamental rights with which it may
interfere. In order to perform such an assessment, it is necessary that the measure is
sufficiently precise and well defined in order to assess its concrete impact on the sharing
of data as well as on other fundamental rights27 . Furthermore, in the context of IP rights
enforcement, the measure must be proportionate in response to an individualised
infringement of IP rights; a measure that aims at preventing IP rights infringements in
general would not be proportionate.
24. Two aspects are particularly important for assessing the proportionality of a measure
aimed at enforcing IP rights: (i) the scale and depth of any monitoring of Internet use
and of Internet users, and (ii) the scale of the IP rights infringements against which such
a measure is directed.
25. A targeted form of monitoring by right holders would be legitimate if the processing is
carried out in the context of specific, current or forthcoming judicial proceedings, to
establish, make or defend legal claims. However, the generalised monitoring followed
by the storage of data on a general scale for the purpose of enforcing claims, such as the
scanning of the Internet as such, or all the activity in P2P networks, would go beyond
what is legitimate. Such general monitoring is especially intrusive to individuals’ rights
and freedoms when it is not well defined and there is no limitation to it, in scope, in
23
See EDPS Opinion of 7 October 2011 on net neutrality, traffic management and the protection of privacy and
personal data, OJ C 34, 08.02.2012, p. 1.
24
Article 8(2) provides that ‘There shall be no interference by a public authority with the exercise of this right
except such as is in accordance with the law and is necessary in a democratic society in the interests of national
security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the
protection of health or morals, or for the protection of the rights and freedoms of others.’.
25
Article 52(1) provides that ‘Any limitation on the exercise of the rights and freedoms recognised by this
Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the
principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of
general interest recognised by the Union or the need to protect the rights and freedoms of others.’.
26
See para. 42 and s. of the EDPS Opinion of 22 February 2010 on ACTA.
27
See Opinion of the Advocate General M. Pedro Cruz Villalón, Case C-70/10, Scarlet Extended SA v SABAM,
14 April 2011, para.66 and 68.
6
time, and in terms of persons concerned28 . As a consequence, the indiscriminate or
widespread monitoring of Internet user’ behaviour in relation to trivial, small-scale not
for profit infringement would be disproportionate and in violation of Article 8 ECHR,
Articles 7 and 8 of the Charter of Fundamental Rights, and the Data protection
Directive 29 .
III.3. The current EU legal framework
26. From an EU perspective, the provisions of ACTA must be read in the light of the EU
current legal order on the protection of fundamental rights and its legal framework
regarding enforcement of IP rights, data protection, as well as the liability regime of
Internet intermediaries. The enforcement measures contained in the digital chapter of
ACTA should therefore be subject to the limitations of the EU legal order.
27. In the EU, the fundamental rights to privacy and data protection have been further
elaborated in primary EU law, in Article 16 TFEU, and secondary EU legislation, in
Directive 95/46/EC and the e-Privacy Directive 2002/58/EC 30 . The rights to privacy and
data protection must furthermore be interpreted in the light of the case law of the
European Court of Human Rights 31 and of the Court of Justice.
28. The current EU legal framework on IP protection has been carefully crafted with a view
to respect other fundamental rights such as the rights to privacy and data protection. The
IPRE Directive 32 , and to a certain extent Directive 2001/29/EC 33 , currently set forth the
conditions for the enforcement of IP rights in civil procedures. Furthermore, the
enforcement measures provided in ACTA should also respect the special liability regime
of ISPs as set forth in the e-commerce Directive 2000/31/EC 34 and the obligations and
limitations set forth on ISPs in the Data Retention Directive 2006/24/EC 35 .
29. There is, however, no harmonisation at EU level concerning criminal sanctions and
procedures for the enforcement of IP right, since no consensus could be reached at EU
level. It remains therefore a field of national competence where such balancing of rights
must be done at national level 36 .
28
See in particular Case C-70/10, Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs
SCRL (SABAM), Judgement of 24 November 2011, and Case C-360/10, Belgische Vereniging van Auteurs,
Componisten en Uitgevers CVBA (SABAM) v Netlog NV, judgment of 16 February 2012.
29
See para 31 to 34 of the EDPS Opinion of 22 February 2010 on ACTA.
30
Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the
processing of personal data and the protection of privacy in the electronic communications sector (Directive on
privacy and electronic communications), OJ L 201, 31.7.2002, p. 37.
31
Interpreting the main elements and conditions set out in Article 8 of the European Convention for the
Protection of Human Rights and Fundamental Freedoms adopted in Rome on 4 November 1950.
32
Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of
intellectual property rights, L 195, 2004-06-02, p. 16.
33
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of
certain aspects of copyright and related rights in the information society, OJ L 167, 22.6.2001, p. 10–19.
34
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects
of information society services, in particular electronic commerce, in the Internal Market (‘Directive on
electronic commerce’), OJ L 178, 17.7.2000, p. 1.
35
Directive 2006/24/EC of the European Parliament and of the Council of 15 March 2006 on the retention of
data generated or processed in connection with the provision of publicly available electronic communications
services or of public communications networks and amending Directive 2002/58/EC, OJ L 105, 13.4.2006, p.
54.
36
This is the reason why the criminal enforcement section of ACTA was negotiated directly by EU Member
States and not by the Commission.
7
30. This need to strike a fair balance between the right to property and fundamental rights,
such as the right to data protection, has been consistently underlined and refined by the
European Court of Justice since the Promusicae ruling 37 .
31. It is thus particularly crucial that the enforcement measures foreseen in ACTA are in
line with the current EU legal framework related to IP rights enforcement, which
respects this balancing of rights.
III.4. Impact of ACTA on future EU and Member States legal frameworks
32. Whilst Articles 27(3) and 27(4) of ACTA are phrased in such a way that the
introduction of these types of measures would not be mandatory for contracting
parties 38 , it nonetheless clearly lays out the possibility for contracting parties, including
the EU as well as its Member States, to do so. Although the use of permissive language,
instead of a mandatory one, would appear less problematic, it does not alleviate the
concerns raised by the introduction of such mechanisms, for a number of reasons.
33. The drafting of the Agreement which came out as a result of the negotiations lacks a
sufficient level of precision and leaves much room for interpretation open to contracting
parties. Such lack of precision is regrettable as the Agreement does not lay out with
sufficient legal certainty the types of mechanisms that could be put in place as a result of
entering into ACTA and the safeguards against the misuse of personal data or to protect
the right of defence.
34. In principle, the measures to be adopted in the EU to strengthen digital enforcement
further to entering into ACTA should remain within the frame of EU law and the respect
of fundamental rights as they are guaranteed in the EU. However, there is a risk that
ACTA will impact the future EU framework as new legislation and modifications to
current EU law might be motivated by the ratification of ACTA along the lines of what
has been agreed. Also the broad implementation of measures under these provisions in
third countries under ACTA might have an influence on the legislative discussion within
the EU. While the Commission is currently looking at revising the IPRE Directive, the
ratification of ACTA may provide incentives to introduce voluntary cooperation
enforcement mechanisms, although no consensus has been reached so far at EU level. It
therefore seems premature for the EU to already commit on certain basic principles,
especially in relation to cooperation mechanisms between stakeholders and ISPs,
considering that there is disagreement on the principle of such schemes.
35. Furthermore, Member States may in the meantime go forward in introducing their own
measures. The current deficiencies in the wording of the text together with the
incentives provided to contracting parties over the implementation and design of
enforcement mechanisms in the digital environment in their own territory are elements
that will open the door for fragmented approaches within the EU, which in turn will run
the high risk of inappropriate or insufficient respect of data protection requirements
within the EU.
37
See in particular Case C-275/06 Promusicae [2008] ECR I-271, paragraphs 62 to 68, Case C-70/10, Scarlet
Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), Judgement of 24 November
2011, paragraph 44, Case C-360/10, Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA
(SABAM) v Netlog NV, judgment of 16 February 2012, paragraphs 42-44, and Case C-461/10, Bonnier Audio
AB, Earbooks AB, Norstedts Förlagsgrupp AB, Piratförlaget AB, Storyside AB v Perfect Communication Sweden
AB, judgement of 19 April 2012.
38
Article 27(3) states that contracting parties ‘shall endeavour to’ and Article 27(4) uses the term ‘may’.
8
36.
In view of the above, the EDPS would have preferred an agreement that contains more
precise terms and specific safeguards, which would have helped prevent any unwanted
approaches.
IV.   DETAILED ANALYSIS OF SPECIFIC PROVISIONS OF ACTA
IV.1. The scope of the digital chapter and the notion of ‘commercial scale’ should be clarified
37. In the digital chapter of the Agreement, it is envisaged that enforcement should take
place primarily in accordance with the civil and criminal enforcement procedures set
forth in the contracting parties’ laws. Other enforcement mechanisms which are specific
to the digital environment are provided in Articles 27(3) and 27(4), although it is unclear
to which extent such other mechanisms would fit in the civil and criminal enforcement
regimes of contracting parties or whether they would constitute ad hoc means of
enforcement.
38. The digital chapter does not define with sufficient clarity the type of acts that would be
subject to any enforcement procedures in the digital environment and whether these
would include, or on the contrary exempt, activities of individuals carried out over the
Internet for purely private purposes, such as private file sharing.
39. In this regard, it is particularly unclear whether only those activities carried out on a
‘commercial scale’ would be subject to the enforcement measures set forth in the digital
chapter. The ‘commercial scale’ criterion is mentioned in the Agreement only in relation
to criminal enforcement procedures (Article 23) 39 but not as concerns civil enforcement
procedures or other enforcement procedures envisaged in the digital chapter. This
appears to be contrary to the EU approach in Directive 2004/48/EC, which applies the
notion of ‘commercial scale’ also in respect of civil and administrative enforcement
measures 40 . Thus, it is insufficiently guaranteed in ACTA that only the activities that are
on a ‘commercial scale’ would be subject to the enforcement measures envisaged in the
digital chapter.
40. Additionally, Article 23 implies a criminalisation of certain acts carried out on the
Internet, which shall be subject to penalties ‘that include imprisonment as well as
monetary fines sufficiently high to provide a deterrent to future acts of infringement’
(Article 24). It attempts to provide for the criminalisation of certain types of acts, such
as ‘wilful copyright piracy’ or ‘wilful related rights piracy’ committed ‘on a commercial
scale’, without however defining clearly which types of acts would constitute a criminal
offence. Moreover, there is no linking of the application of criminal enforcement
measures to those acts that are being recognised as criminal offences in the law of
contracting parties. Article 23 therefore appears to create new categories of offences that
would be subject to criminal enforcement, without however providing for any definition
that would meet the standards of legal certainty required as concerns criminal sanctions.
41. This is all the more worrying since the notion of ‘commercial scale’ itself has not been
defined with sufficient precision to provide legal certainty on the scope of enforcement
measures in the digital environment in relation to acts carried out by individuals in the
39
Article 23 provides that ‘Each Party shall provide for criminal procedures and penalties to be applied at least
in cases of wilful trademark counterfeiting or copyright or related rights piracy on a commercial scale’.
40
Recital 14 provides that ‘The measures provided for in Articles 6(2), 8(1) and 9(2) need to be applied only in
respect of acts carried out on a commercial scale. This is without prejudice to the possibility for Member States
to apply those measures also in respect of other acts (…)’.
9
context of private use. Article 23 specifies in relation to criminal enforcement measures
that ‘acts carried out on a commercial scale include at least those carried out as
commercial activities for direct or indirect economic or commercial advantage’.
However the notion of ‘indirect’ economic or commercial advantage is very broad and
may be interpreted widely to cover a large range of activities carried out by individuals
on the Internet for purely private purposes from which they do not generate any
economic gain or benefit. Furthermore, Article 23 is not an exhaustive list of acts that
would be deemed to fall under the notion of commercial scale (use of the term ‘at least’).
This may contradict the interpretation given to the notion of ‘commercial scale’ in the
EU, where it is considered that it ‘would normally exclude acts carried out by end-
consumers acting in good faith’ 41 and acts ‘carried out by private users for personal and
not-for profit purposes’ 42 .
42.
As a result, the EDPS underlines that the Agreement is unclear about the scope of
enforcement measures in the digital environment, and whether they only target large-
scale infringements of IP rights. He regrets that the notion of ‘commercial scale’ is not
defined with sufficient precision and that acts carried out by private users for personal
and not-for profit purpose are not expressly excluded from the scope of the Agreement.
IV.2. The injunction mechanism and the monitoring of Internet users by right holders
43. In order to strengthen the enforcement of IP rights in the digital environment, Article
27(4) of the Agreement foresees the possibility for contracting parties to set up a
specific injunction mechanism directed at ISPs 43 . This injunction procedure would
allow ‘competent authorities’ to require ISPs to identify the person behind the IP address
whose behaviour is being suspected of infringing IP rights and to disclose such
information ‘expeditiously’ to a right holder.
44. The use of such an injunction mechanism implies that the right holder would engage in
some form of monitoring of the Internet usage to identify accounts that are ‘allegedly
used for infringement’. This involves the processing of sensitive data relating to
suspected offences or criminal convictions, which, pursuant to Article 8(5) of Directive
95/46/EC ‘may be carried out only under the control of official authority, or if suitable
specific safeguards are provided under national law’. Whilst the processing by right
holders of data relating to suspicions of IP rights infringement may be allowed for
purpose of their own litigation under specific conditions, it should not extend beyond
what is necessary and proportionate for such purpose.
41
See recital 14 of Directive 2004/48/EC.
European Parliament legislative resolution of 25 April 2007 on the amended proposal for a directive of the
European Parliament and of the Council on criminal measures aimed at ensuring the enforcement of intellectual
property rights (COM(2006)0168 – C6-0233/2005 – 2005/0127(COD)), OJ C 74E, 20.3.2008, p. 526. See also
Opinion of the European Economic and Social Committee on the Proposal for a European Parliament and
Council Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights
COM(2005) 276 final — 2005/0127 (COD), Official Journal C 256, 27/10/2007, p.0003-0007. In particular that
‘private file sharing on the Internet or reproduction (or music remixes), or the representation of material or
intellectual works amongst family members or private individuals for educational or experimental purposes are
implicitly excluded from the proposed Directive’s scope of application. It would be appropriate to spell out this
exclusion’.
43
According to Article 27(4), a contracting party ‘may provide, in accordance with its laws and regulations, its
competent authorities with the authority to order an online service provider to disclose expeditiously to a right
holder information sufficient to identify a subscriber whose account was allegedly used for infringement, where
that right holder has filed a legally sufficient claim of trademark or copyright or related rights infringement, and
where such information is being sought for the purpose of protecting or enforcing those rights’.
42
10
45. In this respect, as explained in section III.2 above, from a data protection viewpoint
right holders would only be allowed to engage into targeted monitoring in the context of
limited, specific, ad hoc situations where well-grounded suspicions of copyright abuse
on a commercial scale exist. 44 Furthermore, in view of the specific risks to the rights
and freedoms of individuals, such targeted monitoring should be subject to additional
data protection safeguards, such as the prior checking or authorisation by the relevant
national data protection authorities 45 .
46. From a procedural perspective the processing of judicial data by private parties, in
particular the disclosure by ISPs to right holders of personal data allowing the
identification of a suspected subscriber for purpose of enforcement of IPR, should be
done under the control of a judicial authority. 46 This is currently the case as concerns
the disclosure of personal data in the context of civil litigation under the IPRE
Directive, whose Article 8 provides that ISPs may be ordered by competent judicial
authorities to provide personal information that they hold about alleged infringers (e.g.
information on the origin and distribution networks of the goods or services which
infringe an intellectual property right) in response to a justified and proportionate
request in cases of infringements on a ‘commercial scale’. The involvement of judicial
authorities is an essential part of the current EU system and crucial to ensure that
enforcement takes place in respect of due process and fundamental rights.
47. However, it is unclear who would be the ‘competent authorities’ entrusted with such an
injunction power under Article 27(4) of the Agreement. The use of the vague notion of
‘competent authorities’ does not provide much legal certainty that the disclosure of
personal data under this provision would only take place under the control of judicial
bodies. Quite to the contrary, this notion may also include administrative bodies which
have been entrusted with specific quasi-judicial tasks without however being subject to
all the guarantees of independence, impartiality and respect of the rights to the
presumption of innocence and to a fair trial imposed upon judicial bodies.
48. Furthermore, the conditions to be fulfilled by right holders to be granted such an
injunction are also not particularly satisfactory. The right holder must have ‘filed a
legally sufficient claim of trademark or copyright or related rights infringement’ and
must seek such information ‘for the purpose of protecting or enforcing those rights’.
This wording is significantly weaker than the one of the IPRE Directive, under which
the injunction would only be granted under the conditions that the request is made ‘in
the context of proceedings concerning an infringement of an intellectual property right’,
and that it is ‘justified and proportionate’. Under the IPRE Directive, it is for the courts,
on a case-by-case basis, to assess the facts and the gravity of the alleged wrongdoing,
such as its scale and the privacy risks to individuals, in order to decide whether or not
such information must be disclosed.
44
See para 45 and seq. of the EDPS Opinion of 22 February 2010 on ACTA.
Article 20 of Directive 95/46/EC enables Member States to determine data processing operations that are
likely to present specific risks to the rights and freedoms of individuals and to require that these processing
operations are subject to prior checking.
46
Article 29 Working Party document, WP104, page 7: ‘As stated in Article 8 of the Data protection Directive,
processing of data related to offences, criminal convictions or security measures can be processed only under
strict conditions as implemented by Member States. While any individual obviously has the right to process
judicial data in the process of his/her own litigation, the principle does not go as far as permitting in depth
investigation, collection and centralisation of personal data by third parties, including in particular, systematic
research on a general scale such as the scanning of the Internet or the request of communication of personal data
detained by other actors such as ISPs (…). Such investigation falls within the competence of judicial authorities’.
45
11
49.
The uncertainties in Article 27(4) may have a significant impact in the context of extra-
territorial orders issued by foreign competent authorities to ISPs based in Europe. The
current wording of the Agreement may legitimise orders from foreign non-judicial
bodies to EU based ISPs to disclose information allowing identification of their EU-
based Internet subscribers to right holders, even when these orders would be outside the
scope of any ongoing legal proceeding. This means that the protection of the rights of
individuals to which EU-based Internet subscribers would be entitled under EU law
would no longer be properly ensured in such context.
IV.3. Enforcement cooperation mechanisms and the monitoring of Internet by ISPs
50. As explained in section III.1 above, Article 27(3) envisages the voluntary introduction
of ‘private’ enforcement mechanisms that are based upon the voluntary cooperation
between right holders and ISPs.
51. The extent and the form of their cooperation may vary: (i) in the context of three-strike
schemes ISPs are usually required to identify their subscribers in order to pass on to
them warnings which may lead to the termination of their agreement with them, (ii) ISPs
are also asked by right holders to carry out on their behalf the monitoring of suspected
behaviours on the Internet, such as for three-strike schemes or to monitor websites that
would contain allegedly unlawful content, and (iii) they may furthermore be asked by
right holders to implement technical tools to filter peer-to-peer traffic and to block
allegedly unlawful content, which may amount to their monitoring of individuals and of
their electronic communications on a large scale.
52. These forms of enforcement cooperation mechanisms which entail the processing by
ISPs of personal data for the purpose of IP rights enforcement and/or the monitoring of
individuals’ behaviour, including electronic communications, on a large scale raise
serious concerns from a privacy and data protection perspective. They furthermore may
lead to the disconnection of Internet access or the blocking of websites, which may
interfere with fundamental freedoms such as the freedom of expression, the freedom to
receive or impart information and access to culture 47 .
53. It must be ensured that the role that ISPs would be asked to undertake in the frame of
enforcement cooperation mechanisms introduced either in new legislation or at the
request of right holders in the form of private agreements is compatible with their rights
and obligations under EU law as well as with the protection of personal data and privacy
of individuals in the EU. The recent case law of the Court of Justice in respect of
measures imposed on ISPs for the purpose of IP rights enforcement is particularly
enlightening in clarifying the limits of what ISPs are allowed to do in the context of IP
rights enforcement on the Internet under EU law.
54. First, in accordance with the current ISPs liability regime set forth in the E-commerce
Directive, and in particular its Article 15(1) 48 , no measure involving the carrying out of
a general monitoring of the information going through their network can be imposed
upon ISPs. In Scarlet v Sabam 49 , the Court analysed the processing of data undertaken
47
This is mentioned for reference but will not be discussed further as this Opinion only addresses the issues
related to the protection of personal data and privacy of individuals.
48
Article 15(1) of Directive 2000/31/EC provides that ‘Member States shall not impose a general obligation on
providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they
transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity’.
49
See footnote 37.
12
by an ISP that was asked to implement a filtering measure aimed at preventing
infringements of IP rights. The Court observed that such a filtering measure would
require an ISP to actively monitor all the data relating to its customers and to monitor all
electronic communications conducted on its network, whether or not they are engaged in
illegal downloading activities. The Court concluded that such filtering measure would
result in a general monitoring obligation that is incompatible with Article 15(1) of the E-
commerce Directive 2000/31/EC.
55. Second, these types of measures would go beyond the scope of the processing that ISPs
can lawfully carry out under data protection law, and in particular under the e-Privacy
Directive. There is no legal basis under the e-Privacy Directive and the Data Retention
Directive 2006/24/EC that would allow ISPs to lawfully retain the links between
individual IP addresses and Internet usage for the purpose of longer-term monitoring or
analysis aimed at identifying “possible” IPR infringers 50 . Furthermore, the fact that ISPs
may hold certain data does not mean that these data can be transferred to copyright
holders for another purpose. In this respect, disclosure of information they retain under
the Data Retention Directive is limited to competent national authorities ‘for the purpose
of the investigation, detection and prosecution of serious crime, as defined by each
Member State in its national law’ 51 . Moreover, the monitoring of electronic
communications exchanged on their networks would violate the secrecy of
communications as elaborated in Article 5 of the e-Privacy Directive, without however
being justified by any of the exceptions provided in Article 15 of the e-Privacy
Directive. Finally, the disclosure by ISPs of data relating to electronic communications
to third parties without users’ consent would be in breach of Article 5 of the e-Privacy
Directive.
56. Third, as explained in section III.2 above, these types of measures may entail a
monitoring of Internet users’ activities that is disproportionate to the aim of enforcing IP
rights. In this view, the Court held in Scarlet v Sabam 52 that a measure which involves
the monitoring of all electronic communications that is not well defined and specific in
terms of scope, time, and persons concerned would not respect the requirement that a
fair balance be struck between IP rights and other fundamental rights and freedoms 53 .
57. Finally, voluntary enforcement cooperation mechanisms should not be deployed as a
means to circumvent the law. The EDPS considers that it is not sufficiently ensured that
voluntary measures to be developed by private actors further to ACTA would not go
beyond the right balance to be struck between IP rights and data protection.
IV.4. Cooperation and cross-border exchanges of data
58.
Several provisions of ACTA provide for the international exchange of information, such
as between border authorities (Article 29) and between public authorities (Article 34).
ACTA’s provisions on information sharing and cooperation are formulated in such a
broad manner that it is particularly unclear what type of data could be exchanged and
between whom. Such exchanges could cover any type of information, including
personal data relating to suspicions of IP rights infringements. Furthermore, other
50
See para.54 to 60 of the EDPS Opinion of 22 February 2010 on ACTA.
See Article 4 of the Data Retention Directive, as well as Case C-461/10, Bonnier Audio AB, Earbooks AB,
Norstedts Förlagsgrupp AB, Piratförlaget AB, Storyside AB v Perfect Communication Sweden AB, judgement of
19 April 2012, para. 41.
52
See footnote 37.
53
See para. 45 and seq. of the judgement.
51
13
provisions of ACTA may entail the international transfer of information amongst private
parties and/or between public and private parties (e.g. in the context of enforcement
procedures envisaged in Article 11 and Article 27(4)).
59. First, the EDPS emphasises that all the procedures envisaged in the Agreement which
would involve the processing of personal data of individuals within the scope of EU law
must respect data protection laws; this protection covers all categories of individuals,
regardless of their nationality or residence, including those suspected of or potentially
involved in counterfeiting and piracy large-scale infringements.
60. As with any measure having an impact on the privacy and data protection rights of
individuals, transfers of personal data in this context must meet the tests of necessity and
proportionality. The EDPS has already stated in his previous Opinion that the principles
of necessity and proportionality of the data transfers would be more easily met if the
Agreement was expressly limited to fighting the most serious IP rights infringement
offences, instead of allowing for bulk data transfers relating to any suspicion of such
infringements 54 . This has not been followed up as the formulation of the Agreement is
particularly unclear as to the scope of the enforcement procedures (as explained in
section IV.1 above).
61. Furthermore, transfers of personal data to recipients located outside the EU must be
done in accordance with data protection requirements. Articles 25 and 26 of Directive
95/46/EC set forth the conditions under which international transfers of personal data
may be carried out. Specific rules apply in respect of data transfers in the field of
criminal law enforcement, set forth in the Council of Europe Convention No 108 and its
additional Protocol 55 and in the Council Framework Decision 2008/877/JHA 56 . All
these rules are based on common principles, in particular that transfers to recipients
located in countries that are not deemed to provide an adequate level of protection must
be subject to the respect of additional safeguards laid out clearly in legally binding
instruments (such as the amount and types of data transferred, restrictions on onward
transfers, time limit for the retention of the data, oversight and effective redress
mechanisms).
62. As a result, the EDPS underlines that the EU will need to enter into specific agreements
with its trade partners to ensure adequate data protection safeguards for the exchange of
personal data with recipients in these countries.
IV.5. The lack of appropriate safeguards in ACTA
63.
Pursuant to Articles 27(2), 27(3) and 27(4) of the Agreement, the enforcement measures
to be implemented in the digital environment must preserve ‘fundamental principles,
such as freedom of expression, fair process and privacy’. The EDPS underlines that a
mere reference to these principles is not enough. Besides, it is unclear what ‘fundamental
principles’ and ‘fair process’ refer to.
54
See para. 67 of the EDPS Opinion of 22 February 2010 on ACTA.
Convention for the Protection of Individuals with regard to the Automatic Processing of Personal Data,
adopted in Strasbourg on 28 January 1981, and Council of Europe, Additional Protocol to the Convention for the
Protection of Individuals with regard to the Automatic Processing of Personal Data regarding supervisory
authorities and transborder data flows, Strasbourg, 8 November 2001.
56
Council Framework Decision 2008/877/JHA of 27 November 2008 on the protection of personal data
processed in the framework of police and judicial cooperation in criminal matters, OJ L 350, 30.12.2008, p. 60.
55
14
64. At international level, freedom of expression and privacy are recognised as fundamental
rights in the Universal Declaration of Human Rights, and not as mere ‘principles’.
Furthermore, the notion of ‘fair process’ does not correspond to any generally recognised
human right. It appears to mix two different legal concepts, on the one hand the right to
a fair trial (recognised in Article 10 of the Universal Declaration of Human Rights and
Article 47 of the Charter of Fundamental Rights of the EU), and on the other hand, the
notion of ‘due process’ (used for example in the US constitution as a means to protect
any person against deprivation of life, liberty or property without due process of law).
65. It is noteworthy to underline that the European Union laid out precisely in the context of
the review of the above-mentioned Directive 2002/21/EC the safeguards necessary for
the implementation of measures touching upon end-users’ access to, and use of, services
and applications through electronic communications networks. They include in
particular adequate procedural safeguards in conformity with the European Convention
on Human Rights and general principles of Community law, including effective judicial
protection, due process, the principle of the presumption of innocence and the right to
privacy 57 .
66. The EDPS underlines the benefits of an approach that lays out clearly the limitations
and safeguards within which measures touching upon the use and monitoring of
electronic communications networks may take place. It would therefore have been much
better if ACTA had laid out clearly such safeguards.
V. CONCLUSION
67. While the EDPS acknowledges the legitimate concern of ensuring the enforcement of IP
rights in an international context, a right balance must be struck between demands for
the protection of IP rights and the rights to privacy and data protection.
68. The EDPS emphasizes that the means envisaged for strengthening enforcement of IP
rights must not come at the expense of the fundamental rights and freedoms of
individuals to privacy, data protection and freedom of expression, and other rights such
as presumption of innocence and effective judicial protection.
69. Many of the measures envisaged in the Agreement in the context of enforcement of IP
rights in the digital environment would involve the monitoring of users’ behaviour and
of their electronic communications on the Internet. These measures are highly intrusive
57
Article 1(1)(b) of Directive 2009/140/EC, inserting a new paragraph (3a) into Article 1 of Directive
2002/21/EC on a common regulatory framework for electronic communications networks and services (the so-
called ’138 Amendment’): ‘Measures taken by Member States regarding end-users access’ to, or use of, services
and applications through electronic communications networks shall respect the fundamental rights and freedoms
of natural persons, as guaranteed by the European Convention for the Protection of Human Rights and
Fundamental Freedoms and general principles of Community law. Any of these measures regarding end-users’
access to, or use of, services and applications through electronic communications networks liable to restrict those
fundamental rights or freedoms may only be imposed if they are appropriate, proportionate and necessary within
a democratic society, and their implementation shall be subject to adequate procedural safeguards in conformity
with the European Convention for the Protection of Human Rights and Fundamental Freedoms and with general
principles of Community law, including effective judicial protection and due process. Accordingly, these
measures may only be taken with due respect for the principle of the presumption of innocence and the right to
privacy. A prior, fair and impartial procedure shall be guaranteed, including the right to be heard of the person or
persons concerned, subject to the need for appropriate conditions and procedural arrangements in duly
substantiated cases of urgency in conformity with the European Convention for the Protection of Human Rights
and Fundamental Freedoms. The right to effective and timely judicial review shall be guaranteed.’.
15
to the private sphere of individuals and, if not implemented properly, may therefore
interfere with their rights and freedoms to, inter alia, privacy, data protection and the
confidentiality of their communications.
70. It should be ensured that any online enforcement measure implemented within the EU as
a result of entering into ACTA is necessary and proportionate to the aim of enforcing IP
rights. The EDPS underlines that measures that entail the indiscriminate or widespread
monitoring of Internet user’ behaviour, and/or electronic communications, in relation to
trivial, small-scale not for profit infringement would be disproportionate and in breach
of Article 8 ECHR, Articles 7 and 8 of the Charter of Fundamental Rights, and the Data
Protection Directive.
71. The EDPS has furthermore specific concerns in relation to several provisions of the
Agreement, in particular:
- the Agreement is unclear about the scope of enforcement measures in the
digital environment envisaged in Article 27, and whether they only target
large-scale infringements of IP rights. The notion of ‘commercial scale’ in
Article 23 of the Agreement is not defined with sufficient precision, and acts
carried out by private users for a personal and not-for profit purpose are not
expressly excluded from the scope of the Agreement;
- the notion of ‘competent authorities’ entrusted with the injunction power under
Article 27(4) of the Agreement is too vague and does not provide sufficient
certainty that the disclosure of personal data of alleged infringers would only
take place under the control of judicial authorities. Furthermore, the conditions
to be fulfilled by right holders to be granted such an injunction are also not
satisfactory. These uncertainties may have a particular impact in cases of
requests from foreign ‘competent authorities’ to EU-based ISPs;
- many of the voluntary enforcement cooperation measures that could be
implemented under Article 27(3) of the Agreement would entail a processing
of personal by ISPs which goes beyond what is allowed under EU law;
- the Agreement does not contain sufficient limitations and safeguards in respect
of the implementation of measures that entail the monitoring of electronic
communications networks on a large-scale. In particular, it does not lay out
safeguards such as the respect of the rights to privacy and data protection,
effective judicial protection, due process, and the respect of the principle of the
presumption of innocence.
Done in Brussels, 24 April 2012
(signed)
Giovanni BUTTARELLI
Assistant European Data Protection Supervisor
16

http://haieurope.org/wp-content/uploads/2012/04/HAI-Europe_TACD-EU-Innovation-Paper.pdf

 

 

Time for the EU to lead on innovation

 

EU policy opportunities in biomedical innovation and the promotion of public knowledge goods.

 

 

 

 

 

 

 

 

 

 

 

 

 

Policy Paper April 2012

Time for the EU to lead on innovation

EU policy opportunities in biomedical innovation and the promotion of public knowledge goods.

Sophie Bloemen1 and David Hammerstein2

1 Health Action International (HAI) Europe

2Trans Atlantic Consumer Dialogue

 

Email addresses: sophie@haieurope.org &David.Hammerstein@tacd.org

Published by:

Health Action International (HAI) Europe

Overtoom 60 II, 1054 HK Amsterdam. Netherlands. Tel: +31 20 683 3684 Fax: +31 20 685 5002.

Health Action International (HAI) is an independent, global network working to increase access to essential medicines and improve their rational use through research excellence and evidence-based advocacy. www.haieurope.org

Trans Atlantic Consumer Dialogue (TACD)

TACD Secretariat, 24 Highbury Crescent, London N5 1RX, United Kingdom

The Trans Atlantic Consumer Dialogue (TACD) is a forum of US and EU consumer organisations which develops and agrees on joint consumer policy recommendations to the US government and European Union to promote the consumer interest in EU and US policy making. www.tacd.org

Acknowledgements: Teresa Alves (Prescrire),Thiru Balasubramaniam (Knowledge Ecology International), Cora Van den Bossche (HAI Europe), Bryan Collinsworth (UAEM),Christopher Knauth (EC- DEVCO), James Love (Knowledge Ecology International), Joel Lexchin (University of Toronto), Tessel Mellema (HAI Europe), Kirsten Myhr (RELIS Oslo University Hospital), Katrina Perehudoff (HAI Europe), Judit Rius Sanjuan (MSF North America), Tim Reed (HAI Global), Xavier Seuba (Pompeu Fabra University) and Christian Wagner (BUKO Pharma-Kampagne).

 

© Health Action International Europe and Trans Atlantic Consumer Dialogue April 2012

The text may be used free of charge for the purposes of advocacy, campaigning, education, and research, provided that the source is acknowledged in full. The copyright holder requests that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, permission must be secured from HAI Europe (info@haieurope.org). The information in this publication is correct at the time of going to press.

 

Supported [in part] by a grant from the Open Society Foundation

Table of Contents

Acronyms

3

Executive Summary

4

Introduction

9

The problematic current system of biomedical innovation.

11

International debates on medical innovation & EU commitments

16

Proposals promoting affordable access to medicines and needs driven innovation

21

How can the EU be a leader in new innovation approaches?

29

Recommendations

31

Annex of Specific Proposals regarding biomedical innovation and EU policy opportunities

33

Bibliography

43

 

Acronyms/Abbreviations

ACTA Anti-Counterfeiting Trade Agreement

ARV Antiretroviral

CEWG Consultative Expert Group on Research and Development Coordination and Financing

DG Directorat-General

EFPIA European Federation of Pharmaceutical Industries and Associations

EMA European Medicines Agency

EPARs European Public Assessment Reports

HAI Health Action International

GDP Gross domestic product

GSPoA WHOGlobalStrategyandPlanofAction (GSPoA)onPublicHealth, Innovation and Intellectual Property

IMI Innovative Medicines Initiative

INN International Non-proprietary Name

IP Intellectual property

LDC Least developing countries

NIH National Institutes of Health

OSDD Open Source Drug Discovery Initiative

PDP Product Development Partnership

PEPFAR United States President’s Emergency Plan for AIDS Relief

R&D Research and Development

TACD Trans Atlantic Consumer Dialogue

TB Tuberculosis

TRIPS Trade-Related Aspects of Intellectual Property Rights

USTR Office of the United States Trade Representative

WHA World Health Assembly

WHO World Health Organization

WIPO World Intellectual Property Office

WTO World Trade Organization

Executive Summary

The production of knowledge that leads to innovation has always been crucial to social, political and economic development, and nowhere is this more true than in the discovery, development and production of pharmaceuticals. However, the contemporary model of biomedical research tends to enclose knowledge by means of intellectual property rights (IPRs), awarded in exchange for the results of research and development. Indeed, this model has successfully incentivised numerous key medicines in several disease areas. However, in many others it has failed, and it is becoming increasingly clear that the present model of incentives to innovation is not compatible with any vision of the economic sustainability of global healthcare and it woefully neglects the health needs of the world’s poor, who enjoy very limited access to essential medicines.

One of the most critical limitations of an innovation model based on patent monopolies is the reliance on high prices of the resulting technologies. In short, it allows the innovator to recoup R&D costs through high prices while protected against competitors. In addition, the reported paucity of innovation in pharmaceutical companies’ development pipelines has resulted in fewer and fewer innovative drugs of any true therapeutic value reaching the market. Originator companies have gradually shifted their focus from health-needs innovation towards marketing, wide patenting, and litigation against competitors. At the same time, the current innovation model shrouds the results of clinical trials and other health research data in secrecy, leading to a potentially unethical situation in which patients are sometimes being exposed to the harmful secondary effects of medicines where the risks are known but not revealed due to commercial confidentiality.

The globalisation of stringent intellectual property (IP) standards and the accompanying high prices have contributed to limited access to essential medicines in the Global South. Crucially, in the context of this paper, market-driven innovation, extended patents and high prices, add to the financial burden of already over-stretched European public health systems, in the midst of a global economic and public debt crisis.

For all the above reasons, debates on alternative and complementary approaches to innovation for health products have been taking place at the World Health Organization (WHO). The European Union (EU) has also committed itself to exploring alternative models, through its development and health policy objectives.

The WHO Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property (GSPoA) of May 2008, and the EU Council Conclusions on Global Health in May 2010 both called for needs-driven innovation and for further exploration of innovation models that de-link the cost of research and development (R&D) from the price of medicines to encourage both needs-driven research and more affordable access to essential medical technologies. The ‘de-linkage’ of R&D costs from the price of medicines addresses three weaknesses of the current model of medical innovation: unaffordability, unavailability and unsuitability. Many of the new proposals in this paper have recently been recommended by a special WHO Consultative Expert Working Group on Coordination & Financing of Biomedical R&D (CEWG) that will deliver these recommendations to the World Health Assembly (WHA) in May 2012 (WHO, 2012).

In respect of publicly funded medical R&D, one of the core questions is whether knowledge generated by EU financed medical research (in other words, supported by European taxpayers) should continue to be predominantly guided by the current business models of large private actors or whether EU health research policy should contain clear social conditionality. In other words: Should the billions of Euros’ worth of EU funding continue to be awarded without any strings attached such as commitments to social responsibility or openness? Should market-driven innovation be promoted by the EU to the detriment of greater access to effective and affordable health treatment?

The Horizon 2020 EU Research and Innovation Framework provides the EU with an opportunity to make socially responsible choices that lead to new sustainable models of innovation which contribute to the public good. The EU needs to be an investor that makes sure that EU citizens reap the benefits of its investments through improved public health. It is time for the EU to be a leader in the exploration of biomedical innovation strategies that promote both affordable access to R&D outcomes, and the creation of public knowledge goods.

Various proposals and projects have been developed by governments, civil society, academics and industry which attempt to promote both access and innovation. Some are relevant to patients within the EU, while others focus entirely on developing countries and/or diseases that predominantly affect developing countries. A new paradigm of innovation in medical technologies which is gaining ground is based around the sharing of knowledge and data rather than shrouding it in IPR. While a number of these initiatives have already been implemented, others remain policy proposals. Among others, these include:

Socially Responsible Licensing (SRL) or Equitable Licensing – SRL encourages the non-exclusive or conditional licensing of patented technologies. The rationale is to generate the highest possible social benefit from publicly funded research. SRL could be the standard model for publicly funded biomedical research.

Open Source Research – Open Source mechanisms allow researchers to collaborate and share knowledge with an open approach to IPRs. A number of Open Source initiatives have been launched in the medical field over the last decade. Open Source research can be an especially useful tool for neglected diseases, antibiotic research, or for certain conditions that are not properly addressed in a purely market-driven model.

Open Access -This refers to the provision of open access to published research. The high cost of medical journals and high data access fees prevent the sharing of knowledge and wide use of crucial health-related information.

Patent Pooling-The Medicines Patent Pool (MPP) supported by UNITAID aims to simplify and improve voluntary licensing negotiations with the aim of accelerating generic competition to lower the cost of patented medicines and stimulate the development of fixed dose combinations and paediatric forms for HIV/AIDS medications. In order for this to function, companies need to license their HIV/AIDS products to the MPP.

Product Development Partnerships (PDPs) – Aimed at developing new medicines and vaccines through a combination of resources from the public sector, philanthropy, and the pharmaceutical industry. PDPs usually encourage research and the development of products that target diseases which disproportionately affect developing countries.

Innovation inducement prizes – Prizes are an incentive system to induce R&D for new essential medicines, and can be implemented in a manner that ensures competition, affordability and widespread access. Innovation prizes can function to incentivize parts of the innovation process, to reward research outcomes that are not expected to result in commercially viable products. An ambitious version of innovation prizes would include open licensing of the end products.

Biomedical R&D Treaty or Convention- Proposals would secure and enhance sustainable financing mechanisms for R&D, in order to develop and deliver health products and medical devices which address the health needs of developing countries. The R&D Convention concept is predicated upon the principles of a de-linkage of product prices and R&D costs, open-knowledge innovation, competition among suppliers of products, access to and transfer of technology to developing countries. The WHO’s CEWG recommends that formal intergovernmental negotiations on a binding R&D Convention should be initiated (WHO, 2012).

Recommendations

The EU could make a real difference in supporting global calls for an improved system of biomedical innovation. The EU aims to be a leader in technological innovation, yet the EU could and should be a leader in both innovation and access. For the EU to succeed, it needs to look positively at new approaches to innovation and promising developments in the area of incentives and financing of R&D. The EU should consider innovative proposals, especially proposals that de-link the R&D costs from the price of final products, and become a key player in the development of new sustainable models of biomedical innovation and public knowledge goods. The need for a new approach to innovation is even more urgent where R&D is subsidized through public funds. EU policies should be guided by the notion that knowledge goods developed by means of public funds need to be affordable and accessible to all. The Common Framework Horizon 2020 policy is an ideal opportunity for the EU to take the lead in some of the issues described above.

HAI Europe and TACD call upon the EU:

In respect of research programmes and EU internal policy, to:

• Incorporate socially responsible principles as a condition for its biomedical research grants, most notably in Horizon 2020 grants.

• Establish clear rules in Horizon 2020 to mandate open access to EU financed health related research results.

• Promote meaningful technology transfer; Horizon 2020 should increase the level of incentives and support for researchers from developing countries as compared with FP7.

• Carry out feasibility studies and pilot programmes for various innovation inducement prizes, in particular concerning HIV/AIDs, cancer research, neglected diseases and antibiotics.

• Ensure access to clinical trial data of medicines registered with the EMA or national market authorities.

In respect of international policy, to:

• Constructively engage in negotiations for a Biomedical R&D Convention as to be recommended by the WHO Consultative Expert Working Group to the 65th World Health Assembly in May 2012.

• Encourage companies to join the Medicines Patent Pool granting voluntary licences to their patented technologies for better access in all developing countries.

• Rather than extend market exclusivities through IP protection in EU Free Trade Agreements, focus on stimulating therapeutically valuable and affordable innovation.

Introduction

Across the world, more than 2 billion people still lack access to essential medicines with the high cost of medicines being one of the most important factors that contributes to the lack of access. At the same time, pharmaceutical companies’ production pipelines are drying up and few truly innovative medicines that add any real therapeutic value are reaching the market. The considerable financial costs and opportunity costs deriving from the current innovation model affect not only developing countries, but also governments and patients in the European Union (EU). Increasing pharmaceutical expenditure is one major reason why a number of EU Member States are seeing their public health budget burden increase. The unsustainability of this situation in the midst of a global economic crisis is forcing some governments to make decisions to the detriment of patients and consumers, limiting access to life-saving medical technologies.

In order to improve access to medicines and improve innovation, different strategies should be explored. One approach is to engage in strategies within the current system to provide access and improve innovation outcomes. Another approach should focus on investigating and utilizing alternatives to the current model of biomedical innovation. This longer term strategy is the approach that is explored here.

For more than two decades the international public health community has been calling for new models that promote needs-driven, rather than market-driven innovation. The problems regarding the lack of innovation by the transnational pharmaceutical industry (Big Pharma) have also been widely recognized by industry itself. Important underlying ideas to these discussions can be found in the conclusion of the 2006 World Health Organization (WHO) report of the Commission on IPRs, Innovation and Public Health (WHO, 2006, p.10). One conclusion is that in the absence of a profitable market, as is often the case in developing countries, the protection of IPRs in order to stimulate innovation becomes irrelevant.

More recently, the WHO Global Strategy and Plan of Action (GSPoA) on Public Health, Innovation and Intellectual Property of May 2008 (WHO, 2008), and the EU Council Conclusions on Global Health in May 2010 (Council of the European Union, 2010a) have both called for needs-driven innovation and the further exploration of innovation models that de-link the cost of research and development (R&D) from the price of medicines to ensure both innovation and access to essential medical technologies. Meanwhile, successful innovation initiatives, based on greater openness and collaboration, have sprung up around the world, indicating a new way forward.

Instead of playing a proactive role in the debate on new models that encourage innovation and access to essential medical products, the EU has until now, contributed to the furtherance of strict intellectual property (IP) protection and enforcement measures across the globe, that actually limit access to medicines. However the Horizon 2020 EU Research and Innovation Framework provides the EU with an opportunity to make socially responsible choices that lead to new sustainable models of innovation which contribute to the public good1.

In light of Horizon 2020 and the Innovation Union2 agenda, this Policy Paper offers an overview of the most important contemporary discussions, initiatives and proposals on biomedical innovation, and provides recommendations to European institutions on how to become leaders in exploring new and complementary models that promote innovation. It proposes the establishment of a truly innovative research agenda while implementing commitments to Health Equity within the EU and to Global Health (Council of the European Union, 2010a). Not only are there clear moral reasons for policy-makers to explore the proposals being developed, but also economic imperatives. These aim not only to ensure broad access to medical technologies, but also ensure the sustainability of European health systems by rationalising public investment and improving innovation through efficient knowledge management. ‘Business as usual’ is no longer an option.

Although biomedical innovation is a crucial element for guaranteeing access to medicines, it is important to keep in mind that the lack of needs-driven biomedical research is only one factor among others in the access to medicines problem. Furthermore, it should be taken into account there will never be ‘a pill for every ill’ and medicines alone can rarely make a contribution to the health of the people if other crucial elements of health systems and social determinants of health are not in place.

The problematic current system of biomedical innovation

‘Innovationcanbeadrivingforceforimprovingpublicwelfare.Nowhereisthismorestarkthaninthecreationofdrugstotreatfataldiseases.Ifyouhavethedrugyoulive;withoutityoudie. Whetheryouhavethedrugdependsontwoissues:hasitbeendeveloped,andifso,doyouhaveaccesstoit?Theconflictbetweentheseissuesrevolvesaroundhowtostimulateinnovationandhowtopayforit.Drugsarecheaptomanufacture,butexpensivetodevelop.Muchoftheunderlyingresearchcomesoutofacademicinstitutionsfundedbygovernmentgrants.Muchofthedevelopmentworkisbypharmaceuticalcompanies,whichwillnotinvestinresearchanddevelopmentwithoutincentives:inthiscasethepatentsystem,whichrewardsacompanythatdevelopsasuccessfuldrugwitha20-yearmarketingmonopoly.Allowingmonopoliesleadstobadsideeffectsanddrugsarenoexception.’

TimHubbardandJamesLove,TheGuardian,4 February 2004

Howdoesitwork?

ThecurrentpharmaceuticalinnovationmodelisbasedonpatentsandotherformsofIPprotectiontoinnovatorcompanies. Thepatentsystem however, hasnotalwaysdominatedthemodelformedicinesR&D.ManyEuropeancountries which built their industries without patent protectiononlystartedtograntpharmaceuticalpatentsinthe20thcentury.Untilrecently,mostofcontinentalEuropeonlygrantedpatentsonamedicine’sproductionprocess,not on theproductasisnowthecase.Hence,onceamedicinewasdiscovered,othermanufacturerscouldalsoproduceitusingdifferentprocesses (Boldrin and Levine, 2008).

Thecurrentmodelhasproducedmanykeymedicinesforseveraldiseaseareas (Munos 2009).Yet,thismodelalsohasfundamentallimitations.Thedryingup of pharmaceutical companies’ developmentpipelineshasresultedinfewerinnovativedrugsofaddedtherapeuticvaluereachingthemarkets. Thereareofcoursenotableexceptions,buttheseareonlyasmallpercentageofallnewproductsreachingthemarket (La Revue Prescrire, 2001). Companieshavegraduallyshiftedtheirbusinessmodelfromfocusingontherapeuticinnovation,towardsmarketing,widepatenting,litigationagainstcompetitorsandthedevelopmentof ‘metoo’ medicines3oflittletherapeuticadvantage (Boldrin and Levine 2008).Indeed, asanalysedbymagazinePrescrire, out of 97 newdrugsornewindications of a known drugin2010,only four providedatherapeuticadvantage (Revue Prescrire 2011). Meanwhile,pharmaceuticalcompaniesintheEUspend23%ofturnoveronmarketing,whileonly17%isallocatedtoR&D (European Commission 2009).The2009Director-General (DG)CompetitionPharmaceuticalsSectorEnquiryreportalsoconcludedthattheexcessivefocusonlitigationishamperinggenericcompetitionandweakeninginnovation (European Commission 2009).This suggests the current incentives structure is problematic.

Thisintrinsicmodelof knowledge enclosure and secrecy is particularly problematic inthefieldofmedicalresearch,wherenon-disclosureofessentialR&Dhealthdatameansadditionaldelays,bottlenecksandwastefulrepetitioninthedevelopmentoflife-savingdrugs.The secrecy extends to the dataresultingfromclinicaltrials, which are not fully disclosed. This establishesanunethicalsituationwherepatientsareexposedtotheharmfulsecondaryeffectsofdrugswheretherisksareknownbutnotrevealeddue tocommercialconfidentiality. This is exacerbated by the fact that the European Medicines Agency (EMA) in its European Public Assessment Reports (EPARs) only summarises the data and grounds for granting market authorisation for a medicine. Thus it allows only limited public access to the data presented by companies in order to gain market approval.4 Here as well, a move towards openness is required.

Thepromisethatthecurrentpatentsystemandthegrantingofmonopolieswouldencouragemassiveinvestmentinhealth-drivenR&Dhas failed to materialise.MedicinesandothermedicaltechnologiesareexpensiveandtheIPsystemisoften misused. Furthermore,thecurrentpredicamentofbothdecreasinglevelsofeffectiveinnovationandtheforthcomingexpirationofmanylucrativepatentsinEuropehaveledcompaniestoseekhigherrevenuesindevelopingcountriesandemergingmarketsthroughtheimplementationofhigherstandardsofIPprotectionaroundtheworld.

GlobalisingIPProtection

In1994, WTOMembers setglobalstandardsonIPthroughtheAgreementonTrade-RelatedAspectsofIntellectualPropertyRights(TRIPS) (WTO, 1994).EffectivelythisagreementglobalisedEUandUSIPstandards andreduced the possibilityformiddleandlow incomecountriesto either produceorimportgenericmedicinesfrom,forexample,Indiawhichhasalargegenericsindustryanddidnotpreviouslygrantproductpatents.Indiahas acted asthe ‘pharmacyofthedevelopingworld’,providinglowcostmedicinestothepoor.Recognisingtheneedforchecksandbalancesinasystem that was likely to impact adversely on developing countries, the TRIPS agreement doesprovideforflexibilitiesandpublichealthsafeguards (Correa, 2000).Forinstance, under TRIPS flexibilities countriesarelegallyallowedtoovercomepatentbarriersforpublichealthpurposesinordertoeitherproducetheirowngenericversionsof patented medicinesorimportthem.However,theseflexibilities have provedverydifficulttoimplement, asdevelopingcountriesthatattemptedtousethemoftenfacedheavypoliticalpressurefromcompaniesandforeigngovernments to do otherwise. IntheDohaDeclarationontheTRIPSAgreementsandPublicHealth (WTO, 2001),WTO members re-affirmedthat TRIPS ‘canandshouldbeinterpretedandimplementedinamannersupportiveofWTOMembers’ righttoprotectpublichealthand,inparticular,topromoteaccesstomedicinesforall’ (WHO, 2001).Whenused,TRIPSflexibilitieshavesignificantlycontributedtoincreasedaccesstomedicinesinmiddle and low incomecountries.5

Nevertheless,theIPprotectionandenforcementagendaoftheEUandtheUnited States areleadingtoafurtherdeteriorationandundermining/undermi/undofTRIPSflexibilities,and are infactcreatingadditionalIPbarrierstogenericcompetition.ThemostimportantelementsofthisagendaincludeBilateralandRegionalTradeAgreementscontainingstrongIPchapters with TRIPS plus provisions;theWTOAccessionconditions;theAnti-CounterfeitingTradeAgreement(ACTA); the Office of the United States Trade Representative (USTR) unilateralSpecial301 Report; theEUenforcementwatch-list;as well asnationallegislationsandregulations(e.g.anti-counterfeitinglegislations) (HAI Europe, Oxfam, 2009).Together,thesemeasuresrestrictthelimitedpolicyspaceavailablefordevelopingcountriestoprioritizepublichealthovertheprotectionofIPRs. 6 Thissamepolicyspacewillbefurtherrestricted when thetransitionperiodforTRIPSimplementation ends.By2016,theleastdevelopedcountries (LDCs)areexpectedtohave fullyimplementedtheTRIPSagreement(unlessfurtherextensionsinthetransitionperiod are granted).In2005,IndiacompletedtheimplementationofTRIPS,makingitverydifficulttodevelopgenericversionsofnewmedicinescomingtothemarket,unlessitappliesrarelyutilisedTRIPSflexibilities. OnceLDCscomplywithTRIPS theywill also face IP barriers when they seektoimporttheaffordable genericversionsofnewermedicines.

European health budgets & health inequity

In Western Europe, most healthcare systems provide universal access to essential medicines. However, high prices for medicines represent an enormous cost to healthcare budgets and insurance companies, which are coming under increased pressure. In light of the global financial crisis, an ageing European population, and the cost of chronic diseases treatments like cancer and diabetes, governments no longer have sufficient financial means to fully support healthcare systems, especially if some of the new technologies offer little additional therapeutic benefit. In Central and Eastern Europe, where healthcare budgets are even more limited and do not provide for access to all essential medicines, more patients tend to (co)pay for their medication out of pocket. For example, in 2005, the percentage of out of pocket paid for ‘medical goods dispensed to out patients’ in Bulgaria was 79%. Correspondingly in Cyprus this was 81%, in France 16% and in the Netherlands 26% (Van Mosseveld, Kawiorska and De Norre, 2008). The effect of high prices on access to medicines is therefore likely to be more catastrophic. These problems are exacerbated by the fact that Central and Eastern Member States that joined the EU since 2004 were obliged to adhere to the same IP regulations as Western European Member States despite a significant relative difference in the gross domestic product (GDP) per capita. Moreover, in March 2004, prior to their accession, the EU regime on data exclusivity7 was also changed, providing extra market exclusivity to originator pharmaceutical companies in these emerging markets. The Health Ministers of the accession countries raised concerns about higher prices after accession but commercial interests were upheld, with a negative effect on medicines prices and public health budgets.

Several EU countries recently introduced price limits on originator (or brand name) drugs. In Spain, a law was recently passed whereby doctors may only prescribe active ingredients, referring to the International Non-proprietary Name (INN) instead of any brand names. This effective way of lowering costs had already been adopted by other EU countries. Various reforms which encourage greater use of generic medicines and tougher negotiations on prices for patented drugs are of course necessary and beneficial, but they do not address structural flaws of the current system. These shortcomings include inefficient incentives to invest in R&D, excessive secrecy and too little sharing of knowledge, data, materials and technology, and unequal and rationing of access to new patented medicines.

Within the context of the current EU public debt crisis, many public hospitals in Southern Europe are unable to pay for their pharmaceutical expenditure (Ornelas, 2012).This has even led some large pharmaceutical companies, such as Roche, to stop supplying several cancer medicines to Greece (Daley, 2011). Other Southern and Eastern EU Member States may soon face the same predicament and be forced to remove a number of medicines from the list of treatments reimbursed by the State. While European governments are already facing difficulty in increasing their health budgets to accommodate rising pharmaceutical expenditure, this is likely to be amplified with the ageing populations. Access to medicines varies greatly among patients across Europe, and bearing in mind the current political and economical developments, disparities within and between countries are likely to grow. Therefore, the question of whether the current R&D system is sustainable or even desirable must be addressed. If the answer is no, what are alternative models of medical innovation to be considered? In order to convert its policies into real action, and demonstrate its commitment to ‘Equity and Health in all Policies’, the EU must reform its internal market and innovation policies to increase its coherence with these goals. One avenue that has not yet been explored is the promotion of alternative incentives to innovation.

Internationaldebatesonmedicalinnovation&EUcommitments

TheWHO´sglobalcallforanewinnovationmodel

TheEU’sresearchandinnovationpolicystilldoesnotreflecttheinternationalcommunity’srecognitionoftheneedfornewmedicalinnovationmodels, as highlighted in May2008duringtheWorldHealthAssembly(WHA)whereallcountries,includingEUMemberStates,agreedtoacomprehensive Global Strategy and Plan of Action (GSPoA) onPublicHealth,InnovationandIntellectualProperty.TheGSPoA callson all stakeholdersto ‘exploreandpromotearangeofincentiveschemesforR&D,includingaddressingthede-linkingofthecostofR&Dandthepriceofhealthproducts’ (WHO, 2008).Specifically, section 2.3c of the GSPoA calls to ‘encourage further exploratory discussions on the utility of possible instruments or mechanisms for essential health and biomedical R&D, including inter alia, an essential health and biomedical R&D treaty’ (WHO, 2008, p.11).

AConsultativeExpertWorkingGrouponR&DCoordinationandFinancing(CEWG)wasestablishedtoanalysevariousproposalsforinnovativemechanisms.TheWHOworkinggroupthroughaprocessofpublicconsultationshasreceivedvariousproposalsfromWHOMemberStates,civilsociety,academics,industryandotherstakeholders.Proposals that have been consideredinclude:

InnovationInducementPrizes(bothprizesforfinalproductsaswellasmilestoneprizes); OpenSourceR&Dmodels; PriorityReviewVouchers; Newindirecttaxes; MedicinesPatentPools; Equitableandhumanitarianlicenses; BiomedicalR&Dtreaty; Pooledfundsrelatedproposals; AdvanceMarketCommitments, Health Impact Fund, Green Intellectual Property.

Followingtheir three meetingsin April, JulyandNovember2011, as well as regional consultations,theCEWG in April 2012 gaverecommendationson the proposals which best met the criteria.8 The CEWG characterizes most promising proposals as ‘open knowledge innovation’, defined as research and innovation that generate knowledge which is free to use without legal or contractual restrictions. The recommended proposals are for a Global Framework on Research and Development; Open approaches to research and development and innovation9; Pooled funds; Direct grants to companies; Prizes and Patent pools.

Importantly,thereport states: ‘The time has now come for WHO Member States to begin a process leading to the negotiation of a binding agreement on R&D relevant to the health needs of developing countries, and this would be under Article 19 of the WHO Constitution’ (WHO, 2011, Ch.6).

Whilemanyoftheseproposalswere initiallydrawn upwiththeneedsofthedevelopingworldinmind,todaytheseinitiativeshavebecomeincreasinglyrelevantfordevelopedcountrieslike EU MemberStates, and will be discussed in detail the next chapter and in the Annex

De-linkage principle – separating R&D costs from medical product prices:

According to this principle, innovation models should aim at ensuring broad and affordable access to medical products by avoiding time limited legal monopolies that have the effect of increasing price. If implemented correctly, de-linking R&Dcostsfromthepriceofmedicines can address many of the weaknessesofthecurrentmodelofmedicalinnovation:unaffordability,unavailabilityandunsuitability for purpose.

De-linkagecanbeusedasatooltopromoteR&Dfundingtowardneeds-driven,affordableandsociallyresponsiblehealthproducts. As such there would no longer be the need to relyontheexpectationofhighpricesandmonopolies to incentivise innovation.Choosingwhich health problems to beaddressed in researchshould not only be a question of marketsbutoneconcernedwithsocialneeds.De-linkageisakeyfactorforpolicieswhichallowbroadergenericcompetitionforlife-savingessentialmedicinesandthesafeguardingofthefragilefinancialsustainabilityofhealthcaresystems.Mannersinwhichthede-linkageprinciplecanbeappliedisdiscussedinthe Proposals sectionofthisdocument.

Unaffordable:Existingmedicines,vaccines anddiagnosticsareoften too expensiveforindividualsand broad publiccoverage including withinmany EU Member States.

Unavailable:Forcertaindiseasesvery fewornomedicinesordiagnostics are being developed as thereisnoprofitablemarket.Verylittleresearchisdevoted to creatingnew antibiotics and scarceattention isgivento ‘neglected diseases’10affectingtheglobal South. The low productivityof the current R&D paradigm isnotlimited to neglected diseases and antibiotics, even though these are among themost glaring shortcomings. The de-linkage reforms could also be used to accelerate the development of new treatments for diseases such as cancer and Alzheimer’s.

Unsuitable:Often,thedevelopmentofnewdrugsisguidedbytheneedsofwell-financedhospitalsinthemostadvanceddevelopedcountries,whilethesocial,infrastructural,epidemiological,climaticanddemographicconditionsoftherestoftheworld’spopulationsarenottakenintoaccount.

EUcommitmentsonglobalhealthandnewmodelsforinnovation

TheEUhasaclearstanceinfavourofuniversalaccesstohealthandaccesstoessentialmedicalproducts,as highlightedinitsGlobalHealthCouncilConclusionsandthroughitsconsensustotheadoptionoftheWHOGSPoA Intellectual Property onPublicHealth,InnovationandIP.Unfortunately,todate,thesestatedcommitmentshavenotbeentransformedintopoliticalandfinancialsupportforconcreteEUpoliciesinthefieldofmedicalinnovation.

Even so, the EU admits there is need for major changes. In June 2010, the EU Council adopted the Conclusions on Global Health ‘to promote effective and fair financing of research that benefits the health of all. Towards that aim the EU will ensure that innovations and interventions produce products and services that are accessible and affordable’ (European Council, 2010, Art.18). The Conclusions also recognised that one mechanism would be to ‘explore models that dissociate the cost of R&D and the prices of medicines in relation to the WHO´s GSPoA on Public Health, innovation and IP’ (European Council, 2010, Art.18c). For the first time, the EU here openly voiced support for the de-linkage principle. The WHO Global Strategy has established a clear pathway on how to change the medical R&D model into one that favours globally accessible health technologies while at the same time it eases the burden of pharmaceutical expenditure in European Member States´ public health systems. Furthermore, the EU´s 2020 flagship Innovation Union proposal speaks of introducing a more ‘open approach to innovation’, ‘increased open access to the results of EU financed research’ and the promotion of ‘patent pools and innovation brokering’. It also points to inducement prizes as a way forward (European Commission 2010).

Knowledge generated by EU financed medical research (in other words, supported by European taxpayers) should not predominantly lead to returns for large private actors but maximise the general public good, as laid out in recent EU policy declarations11. Today, the question at stake for European Parliamentarians, the European Commission, EU Member States and other policy makers is whether the EU will seriously explore these new innovative proposals, or act as if “business as usual” is the only path with only minor token exceptions. Fundamental to meeting these commitments is the design of incentives, regulations and financing mechanisms. The principles of openness, knowledge sharing and de-linkage or disassociation of the R&D costs from the price of products should be the underlying principles. The EU´s research and innovation funding programmes like Horizon 2020 should reflect these important factors in order to ensure the sustainability of the medical innovation model.

Publicrisk-takingmusthaveaclearreturnforcommonorpublicgood

Economist Mariana Mazzucato (2011, p.109) explains how the generation of knowledge is socialised, with the public bearing the costs, while the commercialisation of publicly financed knowledge is privatised: ‘In finance, it is commonly accepted that there is a relationship between risk and return. However, in the innovation game, this has not been the case. Risk-taking has been a collective endeavour while the returns have been much less collectively distributed. Often, the only return that the State gets for its risky investments are the indirect benefits of higher tax receipts that result from the growth that is generated by those investments. Is that enough?’

In the model of public risk taking, private benefit has been accepted as a necessary measure to spur innovation and support (European) industry. Moreover, mounting evidence leads to questions about the viability and efficacy of policies which increase exclusivity-based commercial exploitation of publicly funded research results in Europe (Tinnemann, Özbay, Saint and Willich, 2010). An ever increasing number of voices in both academic and scientific communities are convinced that inventions from publicly funded research should be made more publicly accessible. The United States have already taken a leadership role, mandating Open Access publication of the National Institutes of Health (NIH) funded R&D. This is currently not the case with the knowledge obtained from EU-financed health research. A growing number of universities in the United States promote equitable or socially responsible licensing for their patents in biomedical research, to ensure that as much social benefit as possible comes from the exploitation and product development of publicly financed innovation. In the EU, funding worth billions of Euros cannot continue to be awarded without any strings attached and with little consideration for the creation of public goods12 in the benefit of global health.

Antibioticsandtheneedforalternativeincentives

One important example of why new approaches to biomedical research are needed is the growing public health concern regarding antimicrobial resistance and the growing inefficacy of currently available antibiotics. Every year, EU citizens suffer 400,000 antibiotic resistance infections leading to 2.5 million days of hospitalisation. Up to 25,000 deaths are attributed to antibiotic resistant infections annually. Such infections annually cost an estimated EUR1.5 billion in healthcare expenditure and productivity loss across Europe. Failure to tackle this growing and dangerous public health challenge is a clear demonstration of market failure. Over the past decades there has been insufficient investment in new antibiotic treatments while many resistant bacteria have emerged, thus radically reducing the chances of curing infections with the available therapeutic arsenal.

There are currently no effective financial incentives or regulatory mechanisms to promote industry or public investment in this important field. This lack of investment stems from the fact that antibioticsdonot usually generatesubstantialprofits.Effortstoconserveantibioticsthroughrationaluseguidelinescurbtheopportunitytoexpandmarkets.Moreover,antibioticsaretypicallyonlyusedforshortperiodsoftimeasopposedtotreatmentsforchronicdiseases.Consequently,asthereisnoexpectationofhighvolumesalesandrevenues,amonopoly-basedincentivemodelbecomesobsolete.Aswithneglecteddiseases,relativelylowanticipatedreturnsoninvestmenthavedeterredfirmsfrominvestingindevelopingnovelantibioticsoverotherproducts.Meanwhile,antibioticresistanceremainsaglobalproblemwithavasthealthimpact. Several de-linkage proposals for antibiotics are currently being discussed in the EU and the United States(see Annex).13

Proposals promoting affordable access to medicines & needs driven innovation

Paralleltointergovernmentalpolicydiscussionsandinternationaldebates,variousproposalsandprojectsthatpromoteinnovationand affordable accesshavebeendevelopedbygovernments,civilsociety,academicsandindustry.SomearerelevantforpatientswithintheEU,whileothersfocusentirelyondevelopingcountriesand/orneglecteddiseases,whicharerelevanttoEUpoliciesandcommitmentsinDevelopmentandGlobalHealth.ThissectionbrieflydescribessomeoftheproposedmechanismsthatarerelevantforEUpolicy,someofwhicharecurrentlybeingimplemented.14 FormoredetaileddescriptionsandanalysisofthesemechanismspleaseseetheAnnex of this policy paper,whereanextensiveoverviewisgiven.

Openinnovationinhealthresearch

Open Source research, open science and open medicine are all variations of an alternative paradigm of innovation in medical technologies which is gaining ground and is based upon the sharing of knowledge rather than enclosing it by means of IP protection or otherwise. Open Science or Open Source research is an approach to research that allows scientists to share problems and interests freely, regardless of organisations, disciplines or borders. This novel culture of innovation is based on the successful experience of Open-Source software. Collaborative research and networks may be more efficient and lower costs in innovation (So, 2011). The pharmaceutical industry has also been resorting to open innovation methods (CEWG, 2012). There is a wealth of Open Science and Open Access initiatives taking place across the world, not least in the innovation ecology environment of the California Bay Area – Silicon Valley – where an important part of the biotech industry is based.15

An Open Source product is one where the design is freely available for anyone to use, modify and distribute, and is created through collaboration between researchers and an open approach to IPRs. When health needs are great but funds are scarce, Open-Source biomedical research could help pool resources to create low-cost business models, especially where public finance is involved. Open Source medicine can be an especially useful tool for neglected diseases, antibiotic research or for certain conditions that are not properly addressed in the pure market-driven model. A number of open source initiatives have been launched in the medical field over the last decade. An important example of open source initiative in biomedicine is the Open Source Drug Discovery (OSDD) Initiative for tuberculosis (TB) which has had impressive results in developing novel compounds.16

Open Access is the practice of providing unrestricted access via the internet to peer-reviewed scholarly journal articles. Open Access publishing has seen a rapid growth over the last years, and studies published in 2010 showed that roughly 20% of the total output of peer-reviewed articles published in 2008 was openly accessible (Björk, 2010). Current expensive medical journals and high data access fees all prevent timely and wide use of crucial health-related information. As the journal Open Medicine states ‘Open access to, and wide use of, research data will enhance the quality and productivity of science systems worldwide’ (Murray, 2008).

Sociallyresponsible licensing

An important approach is the socially responsible licensing of R&D and innovations generated with public funding. The rationale behind this form of licensing is to generate the highest possible social benefit out of publicly funded research. The concept of ‘socially responsible’ licensing is especially appropriate in case of public (research) institutions licensing publicly funded results to private companies, but some socially responsible licensing principles could equally apply to use of research results by private companies receiving public funding for their R&D.

Socially responsible licensing conditions aim to ensure (a) accessibility and affordability of biomedical products – especially for low and middle income countries and (b) to ensure that publicly funded research remains free for use for further (clinical) research, professional education and training, validation of test results, etc. Under this concept of social licensing, a specific proposal has been further developed: ‘equitable access licensing’, also referred to as ‘humanitarian use licensing’. This refers to all kinds of contract clauses and licensing forms that secure the possibility for inventors and technology suppliers to share their IP with people in need, most notably in low and middle income countries. For example, by carving out specific applications or territories and allowing non-exclusive use or lower royalty rates for these regions/applications. This is to ensure that knowledge and technology remain available for humanitarian use, while at the same time allowing for commercial exploitation of the research results in high-income countries.

Socially responsiblelicensingispromotedintheUnitedStatesbytheNational Institutes of Health (NIH) (Innovation Strategy Today, 2005) andbyseveral leading technology offices of US universities, including UC Berkeley which has implemented the ‘SociallyResponsibleIPManagementProgram’ (IPIRA, 2011).Through this programme UCBerkeleyhascollaboratedwithseveralcompaniesonlicensingagreementstoensureaffordablepricinginlow-incomecountriesforproductsstemmingfromuniversityresearch.Projectswithagreementsunderthisprogrammeinclude, among others,TBvaccineresearch,malariaartemisinin-combination therapies (ACTs) researchandresearchforapossibleHIVtreatment (IPIRA).

Inrecentyears,a number ofEuropeanuniversities have alsostartedtoendorsenewlicensingprograms. In 2011, theUniversityofDundeejoinedtheRe:SearchprojectwhichisadatabaserunbytheWorldIntellectualPropertyOffice (WIPO)topushR&Dforneglecteddiseases.Dundee UniversityagreedtoprovideitsIPwhichcan now beusedwithoutroyaltiesbyalllicenseeswhowishtodevelopproductsforneglecteddiseases.

Sociallyresponsiblelicensingcanalsobeaneffectivewayofachieving health technologytransfer.Technologytransfer here referstothemannersandmeansthroughwhichcompaniesandorganisationsacquiretechnologyfromforeignsources.Localproductionofpharmaceuticals,vaccinesanddiagnosticsmaycontributetosustainableandlong-termsolutionstothechallengesposedtohealthinnovationandaccessindevelopingcountries. The EU has committed to technology transfer in the TRIPS and in WHO commitments like the GSPoA on Public Health, Innovation and IP. Taking into account the disappointing results of technology transfer up to now (Moon, 2011), Horizon 2020 should include incentives for companies and research institutes, as well as support for researchers from developing countries, that are stronger, more targeted and more effective than those in Framework Programme 7 (FP7).

Innovation inducement prizes

“A medical prize fund would not provide a panacea, but it would be a step in the right direction, redirecting our scarce research resources toward more efficient uses and ensuring that the benefits of that research reach the many people who are currently denied them.’’

Joseph Stiglitz, 2007, Project Syndicate

PrizesareanincentivesystemtoinduceR&Dfornewessentialmedicines,andcanbeimplementedinamannerthatensurescompetition,affordabilityandwidespreadaccess. Innovation prizes are least controversial when they are proposed as systems for incentivizing parts of the innovation process, to reward research outcomes that are not expected to result in commercially viable products, or designed to replicate Big Pharma payments for reaching benchmarks in a larger innovation program. A more ambitious version of innovation prizes would include open licensing of the end products. Intheopenlicensingapproach,cashprizeswouldbe a substituteforexclusiverightstosellproductsandmonopolyprices. In some proposals, innovatorswouldbeawardedlargemonetaryprizesbasedinpartorinwholeontheimprovementstohealthoutcomesoverexistingproducts.Thiswoulddramaticallyreduceincentivesforthemarketingandpromotionofmedicinesthatareusedirrationally,orthatarenobetterthanthebenchmarkedalternatives. Other proposals would link prize payments to non-specified product performance criteria, such as the accuracy and cost of a point of care diagnostic test.

Avarietyof proposals for prize schemes to reward innovation for new drugs, vaccines or diagnostic devices alreadyexists (Love and Hubbard, 2007).Themostambitiousprizefundapproachescombineseveraldifferentprizemechanisms.Theseinclude(1)end-productprizesthatareawardedtothedevelopersofproductsthatareregisteredforsaleandusedbypatients,(2)opensourcedividendprizes,whichrewardupstreamopensharingofknowledge,data,materialsandtechnology,and(3)prizesforearlierorinterimdevelopment,suchasachievingspecificproductdevelopmentbenchmarksoridentifyingbiomarkers.

Inordertofurtheradvancediscussionsonprizefundmodels,government-anddonor-backedresearchmustbecarriedouttoinvestigatethecosts,benefitsandfeasibilityofvariousimplementationschemes.ThiscouldfocusonseveralofthespecificproposalsthathavebeenputforwardtoaddressveryspecificR&Dandaccessneeds.TheEUcouldplayanimportantandleadingroleinthisexploration. DG Research & Innovation plans to launch a prize for heat stable vaccines in April 2012.This is a step in the right direction, but unfortunately no conditions for accessibility or affordability seem to be put in place, nor for a non-exclusivity in the license.

For SpecificPrizeProposals, pleasesee the Annex.

Other alternative incentive mechanisms

TheHealthImpactFund,thePriorityReviewVoucherandAdvanceMarketCommitmentsare also schemes that employ alternativemechanisms to induce innovation or bring products to the market.Theseproposals,althoughallowingforbroadaccessoncetheproductisavailable,donotnecessarilyencourageknowledgesharing,transparency,sustainablepublicinvestmentorgenericcompetition.TheproposalsaredescribedintheAnnex.

ProductDevelopmentPartnerships

Thepastdecadesawthelaunchofnumerousproduct-developmentpartnerships(PDPs)aimedatdevelopingnewmedicinesandvaccinesthroughacombinationofresourcesfromthepublicsector,philanthropy,andthepharmaceuticalindustry.PDPsresearch,developandsupportaccessibilityofnewhealthtechnologiesthattargetdiseaseswhichdisproportionatelyaffectdevelopingcountries.17Thankfully,theR&Dpipelineforneglecteddiseasesisnowbeginningtoshowsignsoflife,withPDPsmanagingalmost150projectsinpre-clinicalandclinicaldevelopment (DNDi, 2011).

The MedicinesPatentPool (international policy)

The Medicines Patent Pool focuses on HIV/AIDS and was created to increase access to quality assured, safe, efficacious, appropriate and affordable medicines. Here, patent holders share their IP with the Pool which then licenses it to other producers in order to facilitate the production of affordable generic medicines for use in resource-poor settings. In addition to reducing the prices of medicines, the Pool aims to facilitate the development of HIV medicines that are better-adapted for resource-limited settings: examples include medicines that do not require refrigeration, special formulations for children, and ‘ fixed-dose combinations’ that combine multiple medicines into one pill and ease treatment for patients and treatment providers alike (Medicines Patent Pool 2011). Producers may pay royalties to patent owners in order to manufacture patented medicines and sell them in countries well before the expiration of the patent term.

Recently, the Pool obtained a licensing agreement with Gilead as well as sublicensing agreements with generic producers for second line antiretroviral (ARV) treatments.18 The medicines covered are three of the 19 prioritised as especially critical to public health by the WHO’s HIV/AIDS Department. Subsequently, sublicences with generic companies were negotiated, presenting a major step forward in the development of an effective Pool as these licences will have a tangible impact on the lives of many patients. The license between the Pool and Gilead has recently been the subject of criticism in regards to the scope of the license. The terms of the licence are not as inclusive as many had hoped, yet compared to other voluntary licence it is an important improvement. It is key that more companies license their patents to the Pool allowing for a broad scope for both production and importation.

R&D Conventionor Treaty (international policy)

In May 2012, during the 65th WHA, the WHO’s CEWG will recommend that formal intergovernmental negotiations commence on a binding R&D Convention. NegotiationsonsuchabindingintergovernmentalinstrumentwouldtakeplaceundertheauspicesoftheWHO.ItisimportantthattheEUtakesaproactiveroleinthedevelopmentofsuchaninstrument.

The R&D Convention as proposed by the CEWG would have a significant impact on public health as it would create a new global framework for supporting priority medical R&D that is based upon the equitable sharing of the costs of R&D and incentives to invest in needs-driven R&D. The R&D Convention concept is predicated upon the principles of de-linkage of product prices and R&D costs, open-knowledge innovation, competition among suppliers of products, access to and transfer of technology to developing countries. This would involve norms and obligations on both national governments and international institutions. See the Annex for details on the R&D Convention or Treaty.

“Thereisadangerthatindustrysubsidiesmightsometimebelittlemorethancorporate subsidisinganalreadyrichindustry ,or,worse,payingforsomethingthatindustrywouldotherwisehavedoneforitself.”JimMurray, 2001,formerheadofBEUC.

TheInnovativeMedicinesInitiative

TheEuropeanCommissionhasledaEuropeaninitiativetofosterEuropeanR&DthroughtheInnovativeMedicinesInitiative(IMI),apublic?privatepartnershipwiththeEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA). The IMIhighlightsthatthe pharmaceutical industryiswillingtocooperateandtoshareresults provided they benefit from this. Theobjectiveof theIMIistodevelopknowledgesharingtoolsandmethodsthatwillfacilitatethedevelopmentofbettermedicines.TheIMIhasabudgetofEUR 2 billion fortheperiod2009–13,withtheEUproviding EUR 1billionandthepharmaceuticalindustrytheotherhalf.TheIMIsupportspre-competitivecollaborativeresearchinordertoaddressresearchbottlenecksinthedrugdevelopmentprocess.Itsmainobjectivesaretoimprovetheefficiencyofthedrugdevelopmentprocesswiththelong-termgoalofproducingsaferandmoreefficientdrugsandalsotoimproveeducationandknowledgemanagementinR&D.ThechieffocusareasoftheInitiativearebraindisordersandcancer,aswellasmetabolic,infectiousandinflammatorydiseases.

Unfortunately,theInitiativemissedoutontheopportunitytocontributetowardssocietalwelfareandguaranteeaffordableaccesstothedevelopedmedicines.WhiletheIMIensuresthatpublicmoneycontributestowardsmoreefficientR&D, benefits which stem from this research are mainly privatised while there are no clear conditions laid down in regards to affordability,accessibilityandthegeneralpublicinterest.ThefollowingquotebyEFPIAisquitetellinginthisregard: “IMIprojectsreplicateworkthatindividualcompanieswouldhavehadtodoanyway”19 (EFPIA, 2011). Anothercriticismisthattheagendaispredominantly set by industry,withresearchershavinglittlesay.Meanwhile,therehasbeenagreatdealofcontroversy surrounding IPissues asa vaguedefinitionofIPownership currentlyleavesacademicpartnersvulnerableanddisadvantaged. Theirconcernsindicate that industrystandstogainmostfromthispartnership.

TheEUcouldtakeactiontoimprovethelicensingpracticesofIMIandfutureinitiatives,ensuringgreaterpublicbenefitfromthe EUR 1billionthathasbeeninvested. OnewayofaddressingthisproblemwouldbetoapplytheRulesofParticipation(art.45)of the Horizon2020programmethatreferstothe ‘accessofEUinstitutionsandmemberstatestotheresultsofCommunityfinancedprojects’ (European Commission Proposal 2011/0399 (COD)).

How can the EUbealeaderinnewinnovationapproaches?

The way innovation is currently being rewarded is putting the economic sustainability of EU health budgets and research financing at peril. Furthermore, it is undermining access to appropriate and affordable medicines worldwide. There is a clear need to support and explore alternative and complementary models of innovation which will produce public knowledge goods. The EU cannot limit itself to ‘planting the seeds’ of innovation and then naively expect growth, private re-investment in socially relevant projects, and the blossoming of innovation. EU Member States that are greatly stressed by dwindling public resources cannot be expected to contribute generously to innovation programmes that, in some cases, convert the State into venture capitalists with little or no possibility of recovering their risky investments. The following questions remain unanswered and should be addressed by the European Commission, the European Parliament and the Member States:

• What new instruments will be created for the EU´s innovation policy to be coherent with the objective of ensuring relevant, affordable and accessible innovation?

• Will the rules and regulations managing IP in EU research programmes reflect the Innovation Union’s “open approach to innovation, innovation brokering and patent pools”?

• In the midst of a financial crisis affecting many public health systems and the general stagnation of medical research progress, will EU taxpayers continue to hand over billions of euros to large commercial interests with very little competitive or social conditionality?

• Will the EU support the exploration of initiatives being discussed at the WHO and other international fora that aim to structurally reorient biomedical R&D towards a more needs-driven approach, allowing people worldwide to have access to the medicines they need?

Horizon2020programmeandpublicfundingforthepublicgood

The Common Framework Horizon 2020 policy is an ideal opportunity for the EU to take the lead in some of the issues described above. The Research programme has a budget of EUR 80 billion, unequalled by most public research budgets globally. Europe 2020 has recognised crucial challenges: low growth, insufficient innovation and a diverse set of environmental and social challenges. The EU aims to address societal challenges and promote smart and inclusive innovation which leads to equitable benefits. The notion of sustainable and efficient innovation that responds to public health needs can be entirely coherent with EU objectives of promoting a vibrant and competitive market for medical products, defending public health and the protection of jobs in the health sector. The flexibility and openness that has driven the most dynamic technological sectors of our economy, such as software, telecom and IT could also be applied to the medical innovation field. So at a time when funds are scarce and the EU finds itself in a crisis, innovation and competitive businesses should be stimulated, while public money provided by taxpayers needs to be invested wisely, promoting economic and social returns for the public interest.

InternationaldevelopmentsandtheEU’spositionandinfluence

European R&D policy is not just a matter of investing in a given research project. The EU is also a very influential player on the world stage, where multiple policy developments regarding biomedical innovation take place. On the one hand, the EU could make a real difference in supporting global calls for an improved system of biomedical innovation. Once the final recommendations of the WHO´s CEWG are delivered in May 2012, it will be up to the international community to take them forward and implement them. Negotiations regarding a global binding instrument for the coordination and financing of R&D will be key in this respect. We hope the EU will engage itself constructively in these negotiations and accept the broad challenges facing global health. On the other hand, the EU’s IP policy both in its own market and third country markets still focuses on getting increasingly extended market exclusivity periods on medicines. The EU should seriously re-evaluate how this is contributing to innovation.

Recommendations

The EU aims to be a leader in technological innovation, yet the EU could and should be a leader in both innovation and access. For the EU to succeed, it needs to look positively at new approaches to innovation and promising developments in the area of incentives and financing of R&D. The EU should consider innovative proposals, especially proposals that de-link the R&D costs from the price of final products, and become a key player in the development of new sustainable models of biomedical innovation and public knowledge goods. The need for a new approach to innovation is even more urgent where R&D is subsidised through public funds. EU policies should be guided by the premise that knowledge goods developed by means of public funds need to be affordable and accessible to all.

Open Innovation

EUresearchprogrammesneedtoactivelypromoteanewscientificecologyinwhichavibrantopeninnovation sectorisallowedtocompeteandcooperatealongsidemoretraditionalBigPharmaandbiotechindustries. EUhealthresearchprogrammesneedtomorestronglysupporttransparencyandknowledgesharing; this willpromoteacademicintegrity,reducethepotentialforscientificfraudorwastefulrepetitionofresearch,andgenerallyfostergreaterpublicfaithinscientificendeavours.

Societalbenefitsandthepublicgood

The EU´s Horizon 2020 project should condition any transfer of knowledge property to a plan that conforms to ethical, social and environmental objectives in accordance with the public interest. This entails establishing participation rules for EU research programmes that include possible mandatory conditions for licensing that preserve public objectives.

Newincentivemechanisms

TheEUshouldsupportconcreteincentivemechanismstopromoteR&Dthatisneeds-drivenandaffordable.Theprincipleofde-linkingthecostofR&Dfromthepriceofproductsshouldguidethedesignofnewincentivemechanisms.

HAI Europe and TACD call upon the EU:

In respect of research programmes and EU internal policy, to:

• Incorporate socially responsible principles as a condition for its biomedical research grants, most notably in Horizon 2020 grants.

• Establish clear rules in Horizon 2020 to mandate Open Access to EU financed health related research results.

• Promote meaningful technology transfer; Horizon 2020 should increase the level of incentives and support for researchers from developing countries as compared with FP7.

• Carry out feasibility studies and pilot programmes for various innovation inducement prizes, in particular concerning cancer research, HIV/AIDs, neglected diseases and antibiotics.

• Ensure access to clinical trial data of medicines registered with the EMA or national market authorities.

In respect of international policy, to:

• Constructively engage in negotiations for a Biomedical R&D Convention as will likely be recommended by the WHO Consultative Expert Working Group to the 65th World Health Assembly in May 2012.

• Encourage companies to join the Medicines Patent Pool granting voluntary licences to their patented technologies for better access in all developing countries.

• Rather than extend market exclusivities through IP protection in EU Free Trade Agreements, focus on stimulating therapeutically valuable and affordable innovation.

ANNEX of specific proposals regarding biomedical innovation and EU policy opportunities

Figure 1

Basic ResearchProduct DiscoveryClinical Development

Grants for basic research

Open source technology

Open access to publicly financed research

Milestone prizes

Patents

Grants for clinical trials

Final prizes

Interaction between proposed research and development incentives in connection with the development of new drugs for neglected diseases. (Based on Årdal, C., Iversen, J.,H. And Myhr, K., 2011, p. 2017)

 

Push & Pull mechanisms

Financing research and development (R&D) requires inputs from both “push” and “pull” mechanisms. “Push” mechanisms: financing or other incentives provided to innovators up front, which reduce risks or costs of R&D. “Pull” mechanisms: financial rewards or other incentives provided to innovators for progress or completion of research, development, or scale-up of production, which enhance market opportunities.

Figure 2

Push mechanisms Pull mechanisms R&D grants Extended market exclusivity Open access to publicly funded research Government-guaranteed future procurement Open source drug discovery Purchase funds Tax reduction for R&D Patents   Prizes   Tax deduction on sales income   Accelerated regulatory review

Push and pull mechanisms for stimulating research and development (R&D) of new medicines (Based on Årdal, C., Iversen, J.,H. And Myhr, K., 2011, p. 2017)

Socially Responsible Licensing

In order for publicly financed research to revert back into the public good, a new European Union (EU) legal framework is needed to assure that licensing and exploitation of publicly funded research results fulfil broad social objectives.

We propose socially responsible licensing conditions to be attached to the rules of participation of the EU Programme for Research and Innovation – Horizon 2020, specifically to grants funding biomedical research. We recognize that specific licensing conditions between research institutes and private parties need to be determined on a case by case basis. However, this does not preclude the Commission from formulating and implementing clear guidelines, and where appropriate mandatory rules, regarding the use and licensing of research results generated under an EU grant.

We recommend particularly far-ranging social and equitable licensing conditions for R&D generated by publicly funded research for biomedical research, and within this field most strongly in the field of neglected diseases and antibiotics.

An appropriate set of such socially responsible conditions should include non-exclusive licensing as a default. Non-exclusive licensing would generally allow for broader access to health technologies and products, as it allows for more than one company to exploit the innovation, thereby enabling generic competition and as a consequence lowers prices of health technologies and products. If an exclusive licence is negotiated, the owner of an invention (research institute, etc.) or funding authority may retain the right to intervene in case of unmet market or public health needs.

The licensee may further be obliged to use different tools for improving access to the products in middle- and low income countries: the humanitarian use licensing conditions. For example, by implementing the obligations for companies that commercially exploit a product derived from public funded research to implement a differential pricing scheme to ensure affordable access to the health technology in developing countries. Alternatively such licensing conditions can dictate the obligation to allow for open, non-exclusive licenses to enable competition in developing countries that will lower the price of biomedical products. Other elements that can be included are clear obligations to engage in meaningful technology transfer, and including access and training programs (Godt, 2011).

To sum up, licensing conditions for EU-grants for biomedical research under Horizon 2020 grants could include the following principles:

1. No unjustified transfer of ownership of (intellectual property rights protected) research results from research institutes to private companies, and non-exclusive use of publicly funded research results as the default principle.
2. In case of non-exclusivity, licensees should be prevented from using additional or follow-on IP claims on licensed inventions to constrain or block competitive exploitation of licensed research results.
3. In case of exclusivity, the right to use research results and practice the inventions for research and/or educational and teaching purposes should be retained.
4. In the condition for EU grants, socially responsible licensing could also mandate certain conditions requiring the affordability and accessibility of products produced with research results financed by EU funds. For example, when an overriding social demand exists, the European Commission and EU member states should retain the right to exploit the research results on a royalty-free basis or to permit exploitation by third parties in order to confront unmet market needs or to confront clear societal challenges, such as public health.
5. The EU can establish, when appropriate, specific conditions for pricing, open competition and accessibility for the public procurement of the commercial exploitation of EU financed research results in order to fulfil EU policy objectives.
6. Horizon 2020 should further establish clear humanitarian use licensing conditions to improve access and affordability of biomedical products in middle- and low income countries. For example by making non-exclusive licensing mandatory for exploitation of research results in this region, or, in case of exclusive licenses, by requiring the implementation of meaningful differential pricing or other access schemes resulting in low- or no-cost access.
7. Horizon 2020 should establish specific conditions to ensure that EU financed research contributes to meaningful health technology transfer to developing countries in fulfilment of EU policy objectives with regards to global health and access to medicines.

Innovation Inducement Prizes

The HIV/AIDS Prize Fund & the Medicines Patent Pool

The Prize Proposal for HIV/AIDS treatment addresses the problem of the rising costs for HIV/AIDS treatment and the large number of people in need of treatment. Finance mechanisms and donor funded treatment initiatives such as the Global Fund, UNITAID and PEPFAR depend upon generic competition to maximise the purchase of cheap/affordable treatment. At present, more than 90% of donor funded AIDS medications to developing countries are supplied by Indian generic manufacturers (Waning, Diedrichsen and Moon, 2010). However, with the cost of treatments rising as patients are switching to second line and third line antiretroviral (ARV) treatment, while at the same time generic competition is restrained, the Global Fund and other donor funded institutions may not be able to maintain their current levels of treatment for 5.2 million persons, nor address the needs of the remaining 9.7 million individuals still awaiting treatment.

The Donor Prize Proposal presents a possible solution to this ongoing problem, addressing the need for donors to purchase medicines at competitive generic prices, while providing rewards to innovators.

The Prize proposal asks donors to place a fraction of their budgets for purchasing medicines into a fund that would be used to reward companies who license their patent to the Medicines Patent Pool. When patents are licensed to generic suppliers, donors would be able to buy the medicines at marginal cost. Because the prize fund rewards are tied to licensing practices, companies would have strong economic incentives to license to the patent pool, and accept whatever broad scope of distribution was required, including middle income countries. One suggestion for the fraction of budgets is 10 percent of all drug medicines purchases.

More information regarding the HIV/AIDS Prize Fund may be found at the following link: http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_DonorPrize.pdf

Prize fund proposals for Antibiotics

Antibiotic resistance is a major public health problem. The current (irrational) incentives to sell as many antibiotic units as possible and increase market share, have led to the development of antibiotic resistance and failed to stimulate innovation. The public health community and key business leaders have identified the field of antibiotic innovation as one requiring alternative models, which could include the de-linking of price from R&D costs.. For more information please read the following articles:

So, A.,D., et al., 2011. Towards new business models for R&D for novel antibiotics. Drug Resistance Updates, 14, pp. 88-94. Available at: http://www.sciencedirect.com/science/article/pii/S1368764611000161

Outterson K., Pogge T., Hollis A. (2011) Combating Antibiotic Resistance Through the Health Impact Fund. June 22. Boston Univ. School of Law, Law and Economics Research Paper No. 11-30. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1866768

Chagas Disease Prize Fund

Chagas disease (T. cruzi infection or American Trypanosomiasis) is a tropical parasitic disease commonly transmitted to animals and people by insect vectors that are found only in the Americas (mainly, in rural areas of Latin America where poverty is widespread). The disease may also be spread through blood transfusion and organ transplantation, ingestion of food contaminated with parasites, and from mother to foetus. It is estimated that as many as eight to 11 million people in Mexico, Central America, and South America have Chagas disease, most of whom do not know they are infected. If untreated, this chronic disease is often fatal. According to the WHO, the annual impact of Chagas disease is estimated 13,000 deaths. There is currently no adequate treatment for Chagas disease.

For information regarding the proposal by Bangladesh, Barbados, Bolivia and Suriname: Chagas Disease Prize Fund for the Development of New Treatments, Diagnostics and Vaccines please go to the following link: http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_ChagasPrize.pdf

A Milestone Prize

A milestone prize allows rewarding developers as they complete specific milestones along the neglected disease product development process. The proposal submitted by BIO Ventures for Global Health for consideration by the WHO/CEWG regarding a milestone-based Prize to stimulate R&D for point-of-care fever diagnostics is available at the following link: http://www.who.int/phi/news/phi_18_BVGH_CEWG_proposal_en.pdf

Tuberculosis Diagnostic Prize Fund

One major gap in the treatment of tuberculosis (TB) is the lack of a simple, effective, and affordable test to rapidly and accurately diagnose TB, and which can be used as close as possible to a patient’s bedside – at the point of care (POC). Today, the most commonly used test in developing countries, the sputum smear microscopy (SSM), detects less than half of all TB cases, and performs even worse in children and people living with HIV who either have difficulties producing enough sputum, or do not have sufficient or any mycobacteria in their sputum to be detected under the microscope. This test also completely fails to detect the extrapulmonary form of TB. One of the major scientific hurdles to the development of a TB POC test lies in the identification of a biomarker – something that when it is detected shows that a person is infected with TB.

In a submission to the World Health Organization (WHO) Consultative Expert Working Group on R&D Coordination and Financing (CEWG), Bangladesh, Barbados, Bolivia and Suriname proposed a TB Diagnostic Prize Fund of at least USD 100 million for the development of a low-cost rapid diagnostic test. The proposal discusses the need for a TB POC diagnostic test which can be used where health practitioners may not have access to laboratories that can analyse sputum smears. The Prize, administered by WHO, would be awarded once a submission meets the minimum criterion specified by the fund.

The proposal by Bangladesh, Barbados, Bolivia and Suriname for a Prize Fund for the development of low-cost rapid diagnostic test for TBis available at the following link: http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_TBPrize.pdf

Médecins Sans Frontières’ proposal for a TB Diagnostic Prize Fund as submitted to the CEWG is available at the following link: http://www.who.int/phi/MSF.pdf

The Openness Dividend

Prizes can contain an Openness or Open Source Dividend, to reward parties that openly share the knowledge, materials and technology that was critical to the success of the development of the products that qualify for the prize money. For example, the Product Prize Fund shall set aside up to five percent of its prize fund payments to this end.

To qualify for the Openness Dividend, knowledge, materials and technology must be made freely available on a non-remunerative basis. To the extent IPRs exist, the knowledge, materials and technology must be licensed on a royalty free basis for a field of use and geographic region that is consistent with the field of use and geographic region covered by the Prize Fund rewards.

Variations on Open License Innovation Inducements Prizes

Although the following proposals allow for broad access once the product is available, they do not necessarily encourage knowledge sharing, transparency, sustainable public investment or generic competition. This is dependent on how they address IP management and monopolies.

The Health Impact Fund (HIF)

The full proposal is available at the following link: http://www.yale.edu/macmillan/igh/pilot.html

Priority Review Voucher (PRV)

For more information about PRV please go to the following link: http://www.nejm.org/doi/full/10.1056/NEJMp0806684?ijkey=40867983409f7a8a73b1ba1e848fd14ef5ba8af6

Advance Market Commitment (AMC)

For more information about AMC please go to the following link: http://www.haiweb.org/31032009/27%20Mar%202009%20AMC%20Current%20Realities%20&%20Alternate%20Approaches%20FINAL.pdf

R&D Convention or Essential Health and Biomedical R&D Treaty

In a joint submission to the WHO CEWG in June 2011 on a possible essential health and biomedical R&D Treaty, Health Action International (HAI) Global, Initiative for Health & Equity in Society, Knowledge Ecology International (KEI), MSF, and Third World Network (TWN) outlined the rationale, objectives and possible elements for such a Treaty or Convention.

The purpose of the R&D Convention would be to create a new global framework for supporting priority medical R&D that is based upon the fair and equitable sharing of the costs, access, and benefits of R&D. This would involve norms and obligations on both national governments and international institutions.

The Objectives promote a sustainable system of medical innovation that would:

1) ensure adequate and predictable sources of finance for needs-driven medical treatment relevant in particular to diseases and conditions which disproportionately affect developing countries 2) allocate fairly the costs of supporting needs-driven medical treatment, in particular, to meet the health needs of developing countries; 3) identify priority areas of needs-driven; 4) explore and promote a range of incentive schemes for health-needs driven research addressing the de-linkage of the costs of and the price of health products; 5) encourage the broad dissemination of information and sharing of knowledge and access to useful medical inventions including the facilitation of access to publicly funded research; 6) promote transparent and ethical principles for clinical trials involving human beings as a requirement of registration of medicines and health-related technologies; 7) enable medical researchers to build upon the work of others; support diversity and competition; 9) utilize cost effective incentives to invest in promising and successful research projects that address health care needs; 10) enhance the transfer of and building of technological knowledge and R&D capacity to further social and economic welfare and development in developing countries; and 11) promote equitable access to new medical technologies, so that all share in the benefits of scientific advancement.

Bibliography Årdal, C., Iversen, J.,H. And Myhr, K., 2011. New models for pharmaceutical innovation in low-income countries. Tidsskr Nor Legeforen, 20(131), pp.2016-2018.

Björk, B-C. et al., 2010. Open Access to the Scientific Journal Literature: Situation 2009. PLoS ONE, 5(6). Available at: http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0011273;jsessionid=8E4B2F7FA06B6F2D3429B5A4BF253DF9#aff1.

Boldrin, M. and Levine, D., 2008. Against Intellectual Monopoly. Cambridge: Cambridge University Press.

Correa, C., 2000. Intellectual Property Rights, The WTO and Developing Countries. The TRIPS Agreement and Policy Options. Zed Books, London

Council of the European Union, 2010. Council conclusions on the EU role in global health. 3011th Foreign Affairs Council meeting. Brussels. Available at: http://www. consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/114352.

Council of the European Union.2010. Council Conclusion of 8 June 2010 on Equity and Health in All Policies: Solidarity in Health. Brussels. Available at: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/lsa/114994.pdf.

Daley, S., 2011. Fiscal Crisis Takes Toll on Health of Greeks. The New York Times. Available at: http://www.nytimes.com/2011/12/27/world/europe/greeks-reeling-from-health-care-cutbacks.html?_r=1&pagewanted=all

DNDi, 2011. Financing & incentives for neglected disease R&D: Opportunities and challenges. Geneva, WHO. Available at: http://www.who.int/phi/news/phi_3_DNDi_submission_CEWG_190611_en.pdf.

Health Action International, Initiative for Health & Equity in Society, Knowledge Ecology International, Médecins Sans Frontières, Third World Network, 2011. Submission to the CEWG: An Essential Health and Biomedical R&D Treaty. Available at: http://www.who.int/phi/news/phi_1_joint_submission_en.pdf

EFPIA, 2011. [ Accessed 28 October 2o11] Available at: http://www.efpia.org/Content/Default.asp…

European Commission, 2009. Final Report on the competition inquiry into the Pharmaceuticals Sector. Directorat General Competition. Available at: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/.

European Commission, 2010. 546 Final Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Europe 2020 Flagship Initiative Innovation Union SEC1161. Available at: http://ec.europa.eu/commission_2010-2014/geoghegan-quinn/headlines/documents/com-2010-546-final_en.pdf.

European Commission Proposal 2011/0399 (COD) of 30 November 2011 for a regulation of the European Parliament and Council laying down the rules of participation and dissemination in Horizon 2020. Available at: http://ec.europa.eu/research/horizon2020/pdf/proposals/proposal_for_a_regulation_of_the_european_parliament_and_of_the_council_laying_down_the_rules_for_the_participation_and_dissemination_in_horizon_2020%20%282014-2020%29.pdf#view=fit&pagemode=none

European Council, 2010. Council Conclusions of 10 May 2010 on the EU role in Global Health, 3011th Foreign Affairs Council meeting. Brussels. Available at: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/114352.pdf.

Godt, C., 2011. Equitable Licenses in University-Industry Technology Transfer. GRURU Int. Available at: http://med4all.org/fileadmin/med/pdf/Godt_Equit_Lic_GRUR_Int_20111_377_385.pdf.

HAI Europe, Oxfam, 2009. Trading Away Access to Medicines. Available at: http://haieurope.org/wp-content/uploads/2010/12/20-Oct-2009-Report-Oxfam-HAI-Trading-Away-Access-to-Medicines-EN.pdf

Hubbart, T., Love, J., 2004. We’re patently going mad. The Guardian, 4 February. Available at: http://www.guardian.co.uk/education/2004/mar/04/science.highereducation.

Innovation Stategy Today, 2005. 1(3), pp. 203-216. Available at: http://www.biodevelopments.org/innovation/ist3.pdf.

IPIRA. Socially Responsible Licensing at U.C. Berkeley. University of California, Berkeley. Available at: http://ipira.berkeley.edu/sites/default/files/shared/doc/SRLP_Highlights_100910.pdf.

IPIRA. 2011. Socially responsible licensing & IP management. University of California, Berkeley. Available at: http://ipira.berkeley.edu/socially-responsible-licensing-ip-management.

La Revue Prescrire, 2011. New drugs and indications in 2010: inadequate assessment; patients at risk. Revue Prescrire, 31 (328) pp. 134-141.

Love J.,Hubbard, T., 2007.TheBigidea:PrizesToStimulateR&DForNewMedicines.Chicago-KentLawReview, 82(3), pp.1519-1554. Available at: http://www.cklawreview.com/wp-content/uploads/vol82no3/Love.pdf.

Mazzucato, M., 2011. TheEntrepreneurial State. Demos. Available at: http://www.demos.co.uk/publications/theentrepreneurialstate.

Medicines Patent Pool, 2011. Who we are. Available at: http://www.medicinespatentpool.org/WHO-WE-ARE2/Mission.

Moon, S., 2011. Meaningful Technology Transfer to the LDCs: A Proposal for a Monitoring Mechanism for TRIPS Article 66.2. ICTSD, Policy Brief, 9. Available at: http://ictsd.org/downloads/2011/05/technology-transfer-to-the-ldcs.pdf.

Munos, B., 2009. Lessons from 60 years of pharmaceutical innovation. Nature Reviews: Drug Discovery. 8, pp. 959-967. Available at: http://www.ipeg.eu/blog/wp-content/uploads/Lessons-from-60-years-of-pharmaceutical-innovation_Nature_Munos.pdf.

Murray, J., 2011. IMI – A new path to medicines. Open Medicines Blog. Available at: http://openmedicineeu.blogactiv.eu/2011/10/14/imi-a-new-path-to-new-medicines/

Murray, J. et al., 2008. Open science, open access and open source software at Open Medicine. Open Medicines, 2(1). Available at: http://www.openmedicine.ca/article/view/205/104.

Ornelas, A., 2012. Recession-hit nations owe pharma firms billions. Swissinfo.ch. Available at: http://www.swissinfo.ch/eng/business/Recession-hit_nations_owe_pharma_firms_billions.html?cid=32185254

Røttingen, J.,A., 2011. 2nd meeting of WHO Consultative Working Group on R&D Financing (CEWG): Summary of proceeedings by Chair (John Arne Røttingen). Knowledge Ecology International. Available at: http://keionline.org/node/1185.

So, A.,D., et al., 2011. Towards new business models for R&D for novel antibiotics. Drug Resistance Updates, 14, pp. 88-94. Available at: http://www.sciencedirect.com/science/article/pii/S1368764611000161.

Stiglitz, J.,E., 2007. Prizes not patents. Project Syndicate: A World of Ideas. Available at: http://www.project-syndicate.org/commentary/prizes–not-patents.

‘t Hoen, E., 2008. The Global Politics of Pharmaceutical Monopoly Power. Netherlands: AMB.

The 2.3C Committee, 2012. Implementing 2.3(c) of the WHO Global Strategy on Public Health, Innovation and Intellectual Property. Available at: http://www.two3c.org.

Tinnemann, P., Özbay, J., Saint, V.A., Willich, S.N., 2010. Patenting of University and Non-University Public Research Organisations in Germany: Evidence from Patent Applications for Medical Research Results. PLoS ONE. Available at: www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0014059.

Van Mosseveld, C., Kawiorska, D. and De Norre, B., 2008. Health Expenditure 2003-2005. Eurostat Data in Focus 2008/26. Available at: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-QA-08-026/EN/KS-QA-08-026-EN.PDF.

Waning, B., Diedrichsen, E. and Moon, S., 2010. A lifeline to treatment: the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries. The Journal of International AIDS society, 13(35). Available at. http://www.jiasociety.org/content/13/1/35.

WHO, 2004. World Medicines Situation. Geneva, WHO.

WHO, 2006. Public Health, Innovation and Intellectual Property Rights: Report of the Commission on Intellectual Property Right, Innovation, and Public Health (CIPIH) Geneva, WHO

WHO, 2008. WHA61/2008/REC/1 – Global strategy and plan of action on public health, innovation and intellectual property. Sixty-first World Health Assembly, 19?24 May 2008, Resolution WHA61.21. Available at: http://apps.who.int/gb/ebwha/pdf_files/WHA61-REC1/A61_Rec1-part2-en.pdf

WHO, 2012. Research and development to meet health needs in developing countries: Strengthening global financing and coordination. Report of the Consultative Expert Working Group on Research and Development: Financing and Coordination. Geneva, WHO. Available http://www.who.int/phi/CEWG_Report_5_April_2012.pdf).

WTO, 1994. Agreement on Trade Related Aspects of Intellectual Property Rights, Annexure 1C to the Marrakesh Agreement Establishing the World Trade Organisation, (TRIPS), Articles 28.1 a and b. 15 April. Marrakesh, Morocco.

WTO, 2001. WT/MIN(01)/DEC/2 Declaration on the TRIPS Agreement and Public Health. Geneva, WHO. Available at: http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

1 Publicgoodismeanthereasthecollectiveethicalnotionofdecisionscontributingtosocietalwelfare.Theeconomicnotionof ‘publicgoods’ asinnon-rivalryandnon-excludablegoodswillbeemployedlaterinthispaper.

2The Innovation Union, an EU flagship initiative, has recommended the exploration and implementation of innovative and efficient models for innovation.

3 ‘Me too’s’ refers to medicines that are similar or just slightly better than an existing medicine and, with the help of adequate marketing, can take over a share of the market. ‘Me too’ medicines do present some form of competition in an otherwise monopolised market, thereby offering patients a greater variety of choice and slightly lower prices. In the absence of generic competition this therefore does improves welfare somewhat; this, however, comes with the opportunity cost of funds not being invested into innovative medical technology with actual substantial therapeutic benefit.

4 Why is it important that the EPAR be complete, accurate and transparent?

• Healthcare professionals: to know the size of effect of newly licensed medicines for prescribing reasons
• Researchers: to use data in the EPARs for meta-analysis and access data that may never be published in journals
• Consumers: to understand and monitor the drug approval process

More information regarding EPARs may be found at the following link: http://www.ema.europa.eu/ema/index.jsp?curl=pages/medicines/landing/epar_search.jsp&murl=menus/medicines/medicines.jsp&mid=WC0b01ac058001d125

5Compulsory licensing has been applied by Thailand and Brazil to increase access to second line ARVs as well as by several other countries (‘t Hoen, 2008).

6 Examples of TRIPS plus provisions that can undermine the flexibilities:

• Data Exclusivity

• Impose obligations concerning the subject matter or standards for granting of patents

• Limit patent opposition processes

• Patent – Registration Linkage

• Patent Term extensions

• Enforcement measures like border measures, criminalisation of infringements, high damages, limitations to exceptions, injunction measures.

7 “Data exclusivity refers to a practice whereby, for a fixed period of time, drug regulatory authorities do not allow the registration files of an originator to be used to register a therapeutically equivalent generic version of that medicine.” (MSF (2004) technical brief ‘Data exclusivity in international trade agreements: What consequences for access to medicines?’)

8TheseWHO criteriaarethefollowing:

• Publichealthimpact

• Efficiency/ cost effectiveness;

• Technicalfeasibility;

• Financialfeasibility;

• IPmanagementissues;

• Delinking;

• Equity/distributiveeffect,includingonavailabilityandaffordabilityofproductsandimpactonaccessand delivery;

• Governance and accountability;

• Impactoncapacitybuildingin,andtransferoftechnologyto,developingcountries.

9Includes, inter alia, precompetitive research and development platforms, open source, open access and equitable licensing.

10Neglecteddiseasesarediseasesthatdisproportionatelyaffectthepopulationsofdevelopingcountriesandwhichdonotrepresentacommerciallyviablemarketforpharmaceuticalcompanies,becausethepopulationsaregenerallytoopoor.

11Innovation Union and Horizon 2020 commitments.

12The economicnotionof ‘publicgoods’ is meant here as innon-rivalryandnon-excludablegoods.

13 Read: Jack, A., 2011. ‘Prize’ system urged to boost antibiotics research. 7 July. Financial Times. Available at http://www.ft.com/intl/cms/s/0/dcead16e-a7fa-11e0-afc2-00144feabdc0.html#axzz1oFxjWodp

The Economist, 2011. The spread of superbug. 31 March. The Economist. Available at: http://www.economist.com/node/18483671

14 Pushand pullmechanisms:Financing ofR&Drequiresinputsfromboth ‘push’ and ‘pull’ mechanisms.PushmechanismsgenerallyrefertosupplymeasureswhichinvolvegovernmentsandotherfundingagenciesorindustryactivelyencouragingcertainR&Ddirections; ‘pull’ mechanismsrefertothedynamicsofmarketdemandorsimilarincentivesforR&Dincertainhealth-relatedinnovations.

15During the yearly Open Science & Open Medicine Summit researchers, industry and other stakeholders share their experiences and discuss the future of collaborative science and innovation. http://opensciencesummit.com/

16 “AsofSeptember2010,theOSDDidentified18targets,conducted19virtualscreens,andiscurrentlyoptimizingtwoleadnovelcompoundsaspotentialTBdrugs.Thisinitiative,ledbyIndia’sCouncilonScientificandIndustrialResearch,receivespublicfundingandtapsintoanetworkofuniversities,companies,contractresearchorganizations,andvolunteers.’’ (So, A., D., et al., 2011, p.93) Open Source Drug Discovery Initiative web site. New Delhi, Council of Scientific and Industrial Research, 2011 (http://www.osdd.net/)

17 Examples of PDPs in the health field include: the TB Alliance, Aeras Global TB Vaccine Foundation, the Drugs for Neglected Diseases Initiative (DNDi), the Global Alliance for Vaccines Initiative (GAVI), the International Partnership for Microbicides, Medicines for Malaria Venture (MMV), the International Aids Vaccines Initiative (IAVI), the Institute For One World Health, the International Vaccines Initiative, PATH, Malaria Vaccine Initiative, the Innovative Vector Control Consortium, and others.

18 Thelicencescover:tenofovir(TDF),cobicistat(COBI),elvitegravir(EVG),andtheQuad,afixed-dosecombinationofTDF-COBI-EVG-emtricitabine.Thereisalsoacovenantnottoenforceemtricitabine(FTC)patents,andtheabilitytomakeotherfixed-dosecombinationsinvolvingthesecompounds.Onemajordown-sideofthislicenceisthatIndiaistheonlycountryeligibletoproduce,andthegeographicalscopeforbeneficiariesalsoexcludesmanycountries.

19 “Large pharma will also benefit, along with the other participants, from the discoveries made in projects that are worth many times the value of each individual company’s contribution. In some cases, this offers tremendous cost savings, as the IMI projects replicate work that individual companies would have had to do anyway.” This information was retrieved on 28 October 2011 at the following link, but has now been removed by the EFPIA: http://www.efpia.org/Content/Default.asp…