The Battle on Patents and Aids Treatment
Carin Håkansta
Keywords:  India; Aids; Drugs (human); Trade; Patent law; World Health Organization (WHO); World Trade Organization (WTO).
Correct citation: Håkansta, C. (1998), "The Battle on Patents and Aids Treatment." Biotechnology and Development Monitor, No. 34, p. 16-19.

To date, more than 20 million people infected with the Human Immunodeficiency Virus (HIV) live in developing countries, and most of them have no access to drugs available on the market. Zidovudine (AZT) is such a drug that is too expensive for many to afford. Most attempts to break the monopoly of the AZT-manufacturer Glaxo-Wellcome have failed. One exception is the Indian company Cipla. However, the circumstances that made the exception possible will likely cease to exist when the patent rules for members of the World Trade Organization (WTO) fully enter into force. When that happens, it is up to the patent holder to decide who can afford the drug and who cannot.

Antiretroviral treatments have shown to prolong and improve the lives of people with HIV/AIDS. During the past years studies have indicated that a combination of three antiretroviral drugs is so far the most effective treatment available to suppress the replication of HIV. The triple therapy is expensive (US$ 12,000 to 18,000 per patient annually) and a rigorous and difficult regime with a daily intake of about 15 tablets is required to avoid the emergence of drug resistance. Undesirable side effects are common, and clinical and laboratory monitoring is necessary in order to detect adverse reactions (see also Monitor No.30).
The triple therapy has become the standard form of care in the industrialized countries. Although antiretrovirals such as Zidovudine (AZT) as a monotherapy are not longer considered to be an effective treatment of HIV/AIDS, it is still the most effective way to prevent mother-to-child transmission of HIV: the transmission decreases by almost 70 per cent.

Glaxo’ s hold on AZT
AZT was the first antiretroviral drug to be developed, and became available on the market in 1987. Developed before AIDS was known, it was originally meant for cancer treatment. The British pharmaceutical company Glaxo-Wellcome became the first to test AZT as a possible inhibitor of AIDS in the 1980s. Initially, when the drug reached the market, Glaxo-Wellcome was criticized for the high costs of US$ 10,000 per patient annually. Only after sales had increased did the prices decrease to US$ 2,738 annually. Despite the lower price, however, AZT stays out of reach for the vast majority of infected people in the developing countries.
Attempts by North-American companies to produce cheaper AZT have been stopped by Glaxo-Wellcome. In 1991 a two-year legal battle began between Glaxo-Wellcome (at the time called Burroughs-Wellcome) and two other pharmaceutical companies, the US Barr Laboratories and the Canadian Novopharm Inc. In order to prevent the two from manufacturing cheaper versions of AZT, Glaxo-Wellcome filed a lawsuit against the two for patent infringement. The defendants claimed that two scientists from the National Institutes of Health (NIH) were co-inventors of the drug. During the development stage of AZT, Glaxo-Wellcome had sent a sample of the drug under the name "compound S" to the NIH in order to test it on human cells infected with HIV. The question before the court was whether the activity of the scientists from the NIH could be called an inventive contribution or not. According to US patent legislation, to be recognized as the first inventor, one must prove two things. The first is that you were the one that developed the idea (conception), and the second that you were the one to execute the idea and developed a product (reduction to practice). If you only fulfil the first of these, you could have the patent right if you can prove that you had the earliest conception date and then worked diligently to reduce the invention to practice - even if your opponent reduced the invention to practice on an earlier date.
Although the NIH scientists claimed that they had played a crucial role in the conception stage, in 1993 the case was decided in favour of Glaxo-Wellcome. The court argued that the NIH scientists had only conducted tests in accordance with the Glaxo-Wellcome inventors’  instructions. It was decided that the inventors of Glaxo-Wellcome had done sufficient work to conclude that AZT would be effective against HIV based on the effects it had on other retroviruses. During the time of the trial, Novopharm and a Barr subsidiary sold generic versions of AZT in Canada at about half Glaxo-Wellcome’ s price. After the court’ s decision, they had to refrain from selling the drug.

An attempt from India
In 1991, Indian companies also began to produce AZT at a quarter of Glaxo-Wellcome’ s price. The patent dispute around AZT in the USA and in Canada did not have any effect on the production in India since the country had not signed the Paris Convention for the Protection of Industrial Property. Hence, India did not recognize patent protection for pharmaceuticals. Instead, India’ s patent law distinguished between process and product patent. The pharmaceutical sector is one of the three sectors which has a process/method patent instead of the usual product patent. Therefore, a product-patent claim of Glaxo-Wellcome would not hold up before Indian courts.
The Indian Institute of Chemical Technology (IICT) developed a new process for producing AZT, different from the manufacturing process of Glaxo-Wellcome. Indian Cipla Laboratories began manufacturing the "new" drug under the brand name Zidovir-100. Despite protests from the US Government, India’ s production continued. Today Cipla sells Zidovir-100 for a price of US$ 0.76 per 100 mg, which is very low if compared to Glaxo’ s price of around US$ 1.50 per 100 mg. Apart from sales in India, the drug is exported to countries such as Uganda, Tanzania and Belgium.

Dispute settlement
Despite the strong opposition from the Indian pharmaceutical sector, in 1994 India signed the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the General Agreement on Tariffs and Trade (GATT). Due to this, it seems likely that India will have to change its patent legislation in a way that will make a scenario as for Cipla impossible for other pharmaceutical companies. According to the Agreement, India is required to make various changes to its patent laws within five to ten years. The signatory countries with "insufficient" patent laws, such as India, committed themselves not to grant new long-term patent applications. Instead, a "mailbox" has to be established in which applications for new patents were to be kept safe and opened in 2005, when all the signatory countries would have by then upgraded their patent laws.
Meanwhile, as a temporary alternative for patent protection, India was required to provide exclusive market rights for new drugs for a 5-year period. This temporary substitute in India was enacted in 1995 by means of a presidential decree. However, in 1996 the Indian government ran into problems. A government-sponsored bill, meant to protect both processes and products, was stalled in the Upper House by left wing parties and the main Hindu party. Since the 1995 presidential decree had expired and new patent legislation had not been created, India did not live up to the WTO compromise of 1994.
In July 1997, the USA accused India before the Dispute Settlement Panel of WTO of having failed to establish a mechanism that regulates product patents for new pharmaceutical and agricultural chemicals. The Office of the United States Trade Representative argued that the American pharmaceutical industry loses about US$ 500 million a year because of insufficient patent protection in India. The WTO panel decided that India failed to implement the mailbox system to receive fresh patent applications under Art. 70(8) of the TRIPS Agreement. Furthermore, India failed to create exclusive marketing rights for new drugs that entered the Indian market after January 1, 1995, as under TRIPS Art. 70(9). The Indian government appealed against the ruling, arguing that it was already accepting patent applications without instituting the changes sought by the USA. However, the panel has already stated that such a practice violates the Agreement because it does not include patents on products. A final decision is yet to come.

UNAIDS’  view
In 1996, six United Nations organizations and the World Bank established the Joint United Nations Program on HIV/AIDS (UNAIDS). The position of UNAIDS on the production and trade of cheaper HIV/AIDS-related drugs is somewhat ambiguous. On the one hand, UNAIDS has stated that part of the organization’ s main focus is "to actively promote the development, evaluation and availability of appropriate HIV vaccines for worldwide use, especially in developing countries". It adds that "(...) developing countries are becoming a leading force in the area of HIV vaccine development." Despite these encouragements to the pharmaceutical companies of the developing countries, the pilot phase of the UNAIDS HIV Drug Access Initiative, launched in November 1997, did not mention the support of medicine production in the region. The Initiative is a collaboration between the public and private sectors to develop strategies to increase access to HIV/AIDS drugs in developing countries. The pilot phase involves four countries: Chile, the Ivory Coast, Uganda and Vietnam. Within these countries, UNAIDS will try to adapt the health infrastructure in order to ensure effective distribution of HIV/AIDS related drugs. However, no deals have been made with local companies to supply drugs. Instead, large pharmaceutical companies are invited to supply the drugs at subsidized prices. Ironically, UNAIDS has made arrangements with Glaxo-Wellcome to buy AZT, instead of choosing India, Brazil, Mexico or Russia, where AZT is also produced.
According to Joseph Saba from UNAIDS, a UN organization must stick to "international patents laws", wherein Glaxo-Wellcome is the patent-holder. UNAIDS’  ideology in this matter, says Saba, is to stimulate the pharmaceutical companies to lower their prices to make drugs more available. Even though Saba admits that Indian production of AZT is cheaper, it would not be correct for a UN organization to buy those drugs. The fact that developing countries have the right until 2005 to sell drugs patented before 1995, is only a temporary exception and as such not totally acceptable by the law. Furthermore, Saba states that UNAIDS has to plan for the future. In 2005 the organization would have had to go to Glaxo-Wellcome anyway to buy the drug, and Saba believes that keeping a good relationship with Glaxo-Wellcome now is a ticket to a good deal with subsidized prices in the future. Although the legal justification of UNAIDS’  action is dubious, their loyalty has paid off: in March 1998 Glaxo announced that it would sell its AZT for 70 per cent less than the normal price to pregnant women in developing countries. No pharmaceutical company can compete with this. V
Carin Håkansta

Overtoom 447 j, 1054 KG Amsterdam, the Netherlands. E-mail  rli@xs4all.nl

J. Esparza and P. Piot (1996), HIV Vaccine Development: UNAIDS perspectives. Report for Conference in Bangkok, January.

Eric Van Praag et. al. (eds) (1997), The Implications of Antiretroviral Treatments. Informal publication of the WHO, 29-30 April.

Eugene C. Rzucidlo (1993), "The Invention Equation". Biotechnology, Vol.11 December.

UNAIDS Press Release (1997), UNAIDS Launches Initiative to Help Bridge the Gap in Access to HIV/AIDS-Related Drugs in Developing World, 5 November.

Personal communications with S. Kirodian (Cipla), E. van Praag (WHO) and J. Saba (UNAIDS).

Contributions to the Biotechnology and Development Monitor are not covered by any copyright. Exerpts may be translated or reproduced without prior permission (with exception of parts reproduced from third sources), with acknowledgement of source.


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