August 30th and CAMR:Success or Failure?

Canada's Access to Medicines Regime:Lessons for Compulsory Licensing Schemesunder the WTO Doha Declaration

~by George Tsai

Today’s Discussion• Refresher on Doha, August 30th

• Look at Canada’s response to these tradeagreements: CAMR

• Steps and Requirements to follow CAMRto export pharmaceuticals

• Apotex’s use of CAMR to export ApoTriAvir to Rwanda

• Problems with CAMR and August 30th

• Potential Solutions

Part 1

The August 30th decision

Canada’s Response: CAMR

Doha Declaration• Introduced compulsory licensing

– Allowed countries to prioritize health needs ofthe population over patent agreements

August 30th Decision• Modified compulsory licensing

• Allowed nations without manufacturingcapacity to benefit from compulsorylicensing via import of drugs

Canada’s Response

TRIPSAgreement

1995 2001

DohaDeclaration

Aug2003

Aug 30th

Agreement

Dec2003

Canadian Governmentpromises $100m to

fight HIV/AIDS in Africa

Jean Chretien’sPledge to Africa

Act

May2004

http://www.ic.gc.ca/eic/site/ic1.nsf/eng/02392.html

May2005

Canada’sAccess toMedicinesRegime

Canada’s Access to MedicinesRegime

• Implemented in May 2005• Set global precedent for enacting the Aug 30th decision• Canada was widely praised

Incorporated the Aug 30th decision ofthe WTO into Canadian legislation.

“allows countries with pharmaceutical manufacturing capacity tooverride patents in order to make generic drugs for export to

eligible developing countries that need less expensive medicines.”

-Canadian HIV/AIDS legal Network

http://library.catie.ca/PDF/P37/23751.pdf

Issues with Aug 30 DecisionIt was criticized for being:

UncompetitiveOverly complex to get compulsory licenses

Unrealistic

Issues with CAMR

While the August 30th agreement was legislativelycomplex, Canada’s version as CAMR incorporated

even more requirements.

Procedure to export medicines

http://www.camr-rcam.gc.ca/compan-entrepris/applic-demande/prepar_map-schema_e.html

Requirements• Must be an eligible drug

– Schedule 1 of the Patent Act

http://www.camr-rcam.gc.ca/countr-pays/elig-admis/process_e.html

Schedule 1 of the Patent Act•

abacavir (ABC)tablet, 300 mg (as sulfate); oral solution, 100 mg (as sulfate)/5 mLabacavir + lamivudine + zidovudinetablet, 300 mg (assulfate) + 150 mg + 300 mgaciclovirtablet, 200 mg; powder for injection, 250 mg (as sodium salt) in vialamphotericin Bpowder forinjection, 50 mg in vialamprenavirtablet, 150 mg; capsule, 50 mg or 150 mg; oral solution, 15 mg/mLazithromycincapsule, 250 mg or 500mg; suspension, 200 mg/5 mLbeclometasoneinhalation (aerosol), 50 micrograms per dose (dipropionate) or 250 micrograms(dipropionate) per doseceftazidimepowder for injection, 250 mg (as pentahydrate) in vialceftriaxoneinjection, 500 mg (as sodium);powder for injection, 250 mg (as sodium salt) in vialciclosporincapsule, 25 mg; concentrate for injection, 50 mg/mL in 1-mL ampoule (fororgan transplantation)ciprofloxacintablet, 250 mg (as hydrochloride)ciprofloxacintablet, 250 mg or 500 mgdaunorubicinpowder forinjection, 50 mg (as hydrochloride) in vialdelavirdinecapsule or tablet, 100 mg (as mesylate)didanosine (ddI)buffered chewable,dispersible tablet, 25 mg, 50 mg, 100 mg, 150 mg, 200 mg; buffered powder for oral solution, 100 mg, 167 mg, 250 mg, packets;unbuffered enteric coated capsule, 125 mg, 200 mg, 250 mg, 400 mgdiphtheria antitoxininjection, 10 000 IU or 20 000 IU in vialdiphtheriavaccine doxorubicinpowder for injection, 10 mg or 50 mg (hydrochloride) in vialefavirenz (EFV or EFZ)capsule, 50 mg, 100 mg or 200mg; oral solution, 150 mg/5 mLeflornithineinjection, 200 mg (hydrochloride)/mL in 100-mL bottlesenalapriltablet, 2.5mgerythromycincapsule or tablet, 250 mg (as stearate or ethyl succinate); powder for oral suspension, 125 mg (as stearate or ethylsuccinate); powder for injection, 500 mg (as lactobionate) in vialetoposidecapsule, 100 mg; injection, 20 mg/mL in 5-mL ampoulefactor IX(complex coagulation factors II, VII, IX, X) concentratedriedhepatitis B vaccine ibuprofentablet, 200 mg or 400 mgindinavir (IDV)capsule,200 mg, 333 mg or 400 mg (as sulfate)insulin injection (soluble)injection, 40 IU/mL in 10-mL vial or 100 IU/mL in 10-mL vialintermediate-acting insulininjection, 40 IU/mL in 10-mL vial; 100 IU/mL in 10-mL vial (as compound insulin zinc suspension or isophaneinsulin)isoniazid + pyrazinamide + rifampintablet, 50 mg + 300 mg + 120 mgivermectinscored tablet, 3 mg or 6 mglamivudine(3TC)capsule or tablet, 150 mg; oral solution 50 mg/5 mL lamivudine + nevirapine + zidovudinetablet, 150 mg + 200 mg + 300 mglamivudine + zidovudinetablet, 150 mg + 300 mglevodopa + carbidopatablet, 100 mg + 10 mg or 250 mg + 25 mglevofloxacintablet, 250mg or 500 mglithium carbonatecapsule or tablet, 300 mglopinavir + ritonavir (LPV/r)capsule, 133.3 mg + 33.3 mg; oral solution, 400 mg +100 mg/5 mLmetoclopramidetablet, 10 mg (hydrochloride); injection, 5 mg (hydrochloride)/mL in 2-mL ampoulemetronidazoletablet, 250mg or 500 mg; injection, 500 mg in 100-mL vial; suppository, 500 mg or 1 g; oral suspension, 200 mg (as benzoate)/5mLmorphineinjection, 10 mg in 1-mL ampoule (sulfate or hydrochloride); oral solution, 10 mg (hydrochloride or sulfate)/5 mL; tablet, 10mg (sulfate)nelfinavir (NFV)tablet, 250 mg (as mesilate); oral powder, 50 mg/gnevirapine (NVP)tablet, 200 mg; oral suspension, 50 mg/5mLnifedipinesustained release formulations, tablet, 10 mgnitrofurantointablet, 100 mgofloxacintablet, 200 mg or 400 mgoseltamivirphosphate capsule, 75 mg; powder for oral suspension, 12 mg/mLpotassium chloridepowder for solutionranitidinetablet, 150 mg (ashydrochloride); oral solution, 75 mg/5 mL; injection, 25 mg/mL in 2-mL ampouleritonavircapsule, 100 mg; oral solution, 400 mg/5mLsalbutamoltablet, 2 mg or 4 mg (as sulfate); inhalation (aerosol), 100 micrograms (as sulfate) per dose; syrup, 2 mg/5 mL; injection,50 micrograms (as sulfate)/mL in 5-mL ampoule; respirator solution for use in nebulizers, 5 mg (as sulfate)/mLsaquinavir (SQV)capsule,200 mgstavudine (d4T)capsule, 15 mg, 20 mg, 30 mg or 40 mg; powder for oral solution, 5 mg/5 mLtestosteroneinjection, 200 mg(enantate) in 1-mL ampouletimololsolution (eye drops), 0.25% or 0.5% (as maleate)verapamiltablet, 40 mg or 80 mg (hydrochloride);injection, 2.5 mg (hydrochloride)/mL in 2-mL ampoulezalcitabinecapsule or tablet, 0.375 mg or 0.750 mgzidovudine (ZDV or AZT)tablet,300 mg; capsule, 100 mg or 250 mg; oral solution or syrup, 50 mg/5 mL; solution for IV infusion injection, 10 mg/mL in 20-mL vial

Requirements• Must be an eligible drug

– Schedule 1 of the Patent Act• Must be an eligible receiving nation:

– On Schedule 2, 3 or 4 (doesn’t have to be WTO)

http://www.camr-rcam.gc.ca/countr-pays/elig-admis/process_e.html

Eligible NationsSchedule 2: least developed nations• Don’t have to be WTO

Schedule 3: developing nations that have notindicated whether they will use the August 30th

agreement at all or whether they will use it onlyin an emergency

Schedule 4: WTO members that have indicatedthey will use the August 30th agreement in anemergency OR developing nations not in WTObut are on Organization for EconomicCooperation and Development List

Organization for Economic Cooperationand Development

Our mission• OECD brings together the governments of countries

committed to democracy and the market economy fromaround the world to:

• Support sustainable economic growth• Boost employment• Raise living standards• Maintain financial stability• Assist other countries' economic development• Contribute to growth in world trade• The Organisation provides a setting where governments

compare policy experiences, seek answers to commonproblems, identify good practice and coordinatedomestic and international policies.

http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html

Requirements• Must be an eligible drug

– Schedule 1 of the Patent Act• Must be an eligible receiving nation:

– On Schedule 2, 3 or 4 (doesn’t have to be WTO)• Must be approved by Health Canada to Canadian

standards of health and safety• Receiving nation must notify TRIPS office in

Switzerland• Receiving nation must notify the Canadian Government• Pharmaceutical company must enter into a sales

agreement with the importing nation– Must include specific drug, amount, form, price, etc.

• Distinguishing Features must be noted

http://www.camr-rcam.gc.ca/countr-pays/elig-admis/process_e.html

Requirements• Pharmaceutical Company must apply to Canada’s

Commissioner of Patents for Authorization• Must seek a voluntary license from the patent holders• Must receive compulsory license from the government

of Canada• Drug package must be distinctive to identify it from the

same drug manufactured for other purposes: differentcolour and XCL label

• Must identify every party who will be involved withtransport

• Must pay royalties to patent holders• Federal Court of Canada may terminate compulsory

license if these rules are broken.– Patent holders may seek termination as well

http://www.camr-rcam.gc.ca/countr-pays/elig-admis/process_e.html

Part 2 Apotex,

Apo TriAvir,

CAMR

and Rwanda

On September 20th, 2007 Apotex was awardeda compulsory license to export Apo TriAvir to

Rwanda.

A Noble Attempt

http://www.apotex.com/apotriavir/default.asp

http://www.apotex.cz/pub/en/Press-news/May-7-2008-Canadian-Company-Receives-Final-Tende.html?kmnu=

It took over three years to get through the CAMR processto this stage.

Apo TriAvir is a combination of 300mg Zidovudine,150mg Lamivudine and 200mg Nevirapine and is

indicated for the treatment of HIV infection.

"If other critical medicines are to go to Africa in areasonable timeframe, the Federal Government mustchange the CAMR Legislation. CAMR is unworkable

as it now stands. Apotex decided to do this because itwas the right thing to do for the people dying fromAIDS in Africa", stated Jack Kay, Apotex President

and COO.

On September 23, 2008 a shipment of 6,785,640 tabletswent to Rwanda and another shipment of 7,628,700

tablets went on Sept. 17, 2009.

http://www.apotex.cz/pub/en/Press-news/May-7-2008-Canadian-Company-Receives-Final-Tende.html?kmnu=

Each dose was priced at $0.39 totalling around $5.3 million the cost toApotex was $3 million not including legal fees.

http://www.apotex.com/apotriavir/default.asphttp://stanford.wellsphere.com/hiv-aids-article/no-room-for-petty-politics-in-goodwill-program/509588

Apo TriAvir Problems1. Zidovudine, lamivudine and nevirapine

and drug combos were not on Schedule1 of the Patent Act.

2. Apotex had to negotiate with Glasko-Smith-Kline, Shire and BoehringerIngelheim for voluntary licenses.

3. Apotex had to compete against othergeneric companies for the tender fromthe Rwandan Government.

Apotex and Rwanda

Aug2003

Aug 30th

agreement

July2007

May2004

JeanChretien’sPledge toAfrica Act

http://heinonline.org/HOL/Page?handle=hein.journals/vajint49&div=28&g_sent=1&collection=journals

Dec2004

Apotex beginswork on Apo-

TriAvir

Rwanda notifiesWTO of its

intention to usethe Aug 30th

Sept2008

First Shipmentof Apo TriAvir

to Rwanda

Sept2005

Schedule 1 ofPatent Act

approved fixeddose combination

drug

Aug2006

Apo TriAvirapproved by

HealthCanada

May2007

Apotexrequestsvoluntarylicenses.

Sept2007

Canada grantscompulsory

license to Apotex

CAMR

May2005

Almost four years!

May2008

Rwandagives

Canadafinal

tenderapproval.

Part 3:

Problems with CAMR(and August 30th agreement)

Lack of Business Incentive

A. High Legal and Procedural Costs

B. Limited Potential for Profit

C. Intense International GenericsCompetition

A. High Cost1. Production Costs: Research and Development,

reverse engineering patented drugs• Similar to standard drug development

2. Transaction Costs: legal fees, voluntary licenseapplications

3. Royalties: Despite the high costs and low return ofCAMR, patent holders must receive a maximum of 4% ofthe profits of export.

4. Legislative Costs: Obtaining Health CanadaApproval with New drug regulations

1. Production Costs

• Research and Development– Similar to normal drug development

• Reverse engineering patented drugs• Physical production

– Factory, personnel, distribution, etc

2. Transaction Costs

• Legal fees• Meeting CAMR requirements

– Ex. Certified copy of compliance with WTOrequirements for quantity/type of drug andlack of pharma industry in receiving nation.

– Website maintenance– Issuing export notices to all parties involved

• Voluntary License Negotiations

3. Royalties• Royalties must be paid to the patentees of the original

drug(s)• These are determined by the Governor in Council and

the Federal Court may increase the amount set• Maximum of 4% of “profits”

The formula to determine the royalty rate is 1,plus the number of countries on the UNHDI,minus the importing country's rank on theUNHDI, divided by the number of countries onthe UNHDI, multiplied by 0.04.

http://www.camr-rcam.gc.ca/compan-entrepris/applic-demande/royal_pay-verse_redev_e.html

4. Legislative Costs

• Cost of Health Canada Approval for Food andDrugs Act– must meet same standards as domestic drugs

• Canadian law does not require regulatoryapproval for normal exported pharmaceuticals– CAMR exports are held to higher standards than

normal exports• Combination drugs are considered new drugs

and must go through more rigorous applicationsthen “generic” drugs

B. Limited Return on Investment

1. Price Limits

2. Short Duration of CompulsoryLicense

1. Price Limits

• Price of drug cannot exceed 25% of the averageprice of an equivalent drug in Canada.

• If it is priced higher than 25%, the patentee cansue the licensed company for pursuing acommercial venture– Federal Court can either terminate the license or

increase royalties to represent commercial patentuse

2. Limited Compulsory LicenseDuration

• Compulsory Licenses are issued for twoyears with an option for a two yearrenewal– Little time to recoup start-up costs let alone

make a profit

C. International GenericsCompetition

• Cost of all aspects of drug production is muchcheaper in many developing nations

• Example: India vs. Canada

$0.14$0.39Apo TriAvirTRIPSCAMRIP laws$1/hr$15/hrSalary$130m$1billionFacilityIndiaCanadaCost

Solutions to CAMR: CommercialIncentive

1. Remove requirement of voluntary license application• Not required under TRIPS

2. Relax price limits and manufacturing time limits

“But Karen, without price limits won’t the drugsbecome expensive again making the entire

CAMR process redundant???”

3. Government tax breaks for companies using CAMR.

4. Government Research grants to balance R&D costs.

Government Subsidies!

To allow companies to charge higher than25% Canadian domestic prices for drugs,Canada and the importing nation couldsplit the cost for the higher price.

CAMR as a loophole for stockpilingGeneric drug manufacturers are not allowed to

begin reverse engineering patented drugs untilthe patent has expired. This creates a lagbetween patent expiry and the time the firstgeneric version of a drug enters the market.

CAMR could be used as a stockpile method because itallows a company to generically produce a drug while

the patent is still valid domestically and the day it expiresthe generic version can be sold in Canada without

competition from other generics. No lag time.

Why is no one doing this?

List of eligible drugs

The most likely reason that companies arenot taking advantage of this loophole isdue to the eligible drugs that can beexported through CAMR.

It covers drugs that treat neglected tropicaldiseases like malaria, tuberculosis, leprosy,

etc. and these drugs don’t have a substantialmarket in Canada.

If there are so many problems withCAMR, why doesn’t the

government do change it?

Hypothesized reason:CAMR was put in place under a Liberal

Federal government and consequently thecurrent Conservative government is notmotivated to make it work.

Questions and Discussion?

• On the bright side…What are the Pros ofCAMR?

• So should we revise CAMR/August 30th orjust get rid of it?

• Is Export of Inexpensive Medicines andeffective way of Increasing Access toessential medicines?

Bill C-393“Bill C-393 proposes critical changes to Canada's access to

medicines regime. Let me mention a few of them.• It provides for a one licence system to replace the need

for single applications for every drug, for every amount ofdrug produced, and for every country which is seekingmedications. That is important.

• It gets rid of the narrow list of eligible drugs in order thatnew medicines can be incorporated at the earliestpossible time.

• It gets rid of the two-year time limit on compulsorylicences with only one reapplication allowed.

• It lives up to our international trade agreements whiledumping the CAMR's requirements that exceed WTOdemands.

• Finally, it discourages unnecessary legal action byallowing generic producers to correct minor errors withina limited time.”

http://judywl.ndp.ca/node/385