tiently until later drugs are developed, which may or may not be available after all. And similarly, the history of international drug development teaches us that waiting for the new, equally effective, but less expensive regimens is not something that really has shown a lot of benefit over the years. Furthermore, pharmaceutical R&D expenditures have actually doubled between 1990 when Congress imposed some price restraints on Medicaid drugs, and 1995; we heard the R&D scare card brought out in full force in 1990. The pharmaceutical industry is uniquely profitable; the most profitable industry in this country, whether measured by sales, by assets or by equity, and since 1989, pharmaceutical companies' return on equity has been at least 1.7 times the median of all other U.S. industries. Given these extraordinary profits and the failure of the drug industry to make critical medications available for developing country patients, we urge you to call the R&D scare card bluff. In conclusion, neither the viral resistance nor the R&D scare card arguments provide support for closing these legal trade measures. As it happens, the sub-Saharan Africa market represents a scant 1.4 percent of the global pharmaceutical market. An explanation for the pharmaceutical companies' opposition to compulsory licensing and parallel import is to be found elsewhere: in their desire to not have their irrational pricing practices exposed-we have drugs available in Europe at often 50 percent lower than they are here-and to maintain their high profit margins. We suggest that providing potentially lifesaving drugs to residents of developing countries should have a higher priority. Thank you. Mr. MICA. Thank you for your testimony. [The prepared statement of Dr. Lurie follows:] Statement of Peter Lurie, MD, MPH Subcommittee on Criminal Justice, Drug Policy, and Human Resources Recently, the pharmaceutical industry has questioned compulsory licensing' and parallel imports2 on the grounds that these measures might 1. lead to the development of strains of the human immunodeficiency virus (HIV) that are resistant to currently available medications; and 2. result in decreased pharmaceutical company research and development (R&D). This testimony will address these two claims in turn. The Viral Resistance Argument Tom Bombelles, Assistant Vice President International for the Pharmaceutical Research and Manufacturers of America (PhRMA) has recently asserted: “Just giving people drugs without the proper treatment can create drug-resistant strains of HIV. It can make people sicker, not better. And that threatens AIDS patients everywhere around the world."3 The potential development of resistance to anti-HIV drugs is a serious public health concern, one that threatens to undermine the enormous gains that have been made in treatment for HIV infection in this country. But before one can address the validity of the HIV-resistance argument directly, one must acknowledge the following aspects of compulsory licensing and parallel importing that transcend viral resistance: ●The compulsory licensing and parallel import proposals do not require any country to engage in these practices. Rather countries are left to decide for themselves if they wish to use these mechanisms. But preventing compulsory licensing and parallel imports in blanket fashion robs developing countries of that choice. ●The compulsory licensing and parallel import mechanisms proposed by South Africa, for example, do not only involve AIDS drugs or those for infectious diseases. The "resistant strain" argument is thus being used to prevent improved access to lifesaving drugs for even noninfectious diseases such as heart disease and cancer. Drugs like simvastatin, to lower cholesterol, and ranitidine, for ulcers, could be dramatically reduced in price. ●Fluconazole is a drug that treats an often-fatal complication of HIV infection, cryptococcal meningitis, rather than HIV itself. Its price could be dramatically reduced by either compulsory licensing or parallel importing. Two 150 mg fluconazole tablets sell for $23.50 in Italy, where its patent is protected, compared to $0.95 in India where the patent is not recognized. Let me now turn to the HIV-resistance argument directly. ●For a patient to be worse off due to the development of viral resistance, one would have to believe that a patient who develops a resistant HIV strain due to partial adherence to anti-HIV therapy is worse off than one who is not treated with anti-HIV drugs at all. But there is no evidence to support that assertion. First, many patients do not develop antiviral resistance. Resistance to zidovudine, the first anti-HIV drug to be approved, has been estimated at 0% to 10% in Europe and North America.* Even for those who develop resistance, there is no reason to believe that the mutations necessary to confer resistance will be associated with those that confer greater aggressiveness, as these are separate genetic phenomena. A recent review points out that in the absence of therapy, "wild-type (primarily non-resistant] strains may have a replication advantage [over resistant strains] that dominates over time." There is also some evidence that HIV strains resistant to zidovudine are more difficult to transmit." ●The decision to prescribe or not prescribe effective medication is a matter between a patient and his or her doctor. Two authors, writing in the American Journal of Public Health have argued that, “it would be very difficult to justify denial of access to protease inhibitors [specific drugs for HIV infection] in the face of expressed patient preference for treatment except in the presence of clear and compelling evidence that a patient could not or would not be adherent."" But opposing compulsory licensing and parallel imports is a blunt instrument indeed: because of high costs, physicians and patients would be unable to make that case-by-case assessment and patients would instead be denied drug simply on the basis of their residence. ●The solution to the development of drug resistance due to patient difficulty in adhering to the often-complex AIDS drug regimens is not denial of drug, but rather interventions to improve adherence. Such interventions have had substantial success with tuberculosis in developing countries, including with HIV-infected populations.1o Has anyone suggested leaving tuberculosis or malaria patients untreated to prevent the development of resistance? 10 ●One should not write off the entire developing world with a broad-brush stroke. Clearly there are enormous differences between developing countries and within them. For example, very impoverished African countries such as Zimbabwe, Zambia, Uganda, Botswana, Senegal and Cote d'Ivoire are planning to provide anti-HIV drugs for HIV-positive women to prevent HIV transmission to their infants." Other countries, such as Brazil, provide complex anti-HIV drug regimens to their HIV-positive populations. ●It is true that pharmaceutical company pricing practices are not the only reason that anti-HIV drugs are unavailable in most developing countries. The lack of health care infrastructure is a very important impediment to drug delivery. But pricing is an important, and in this case partially correctable, part of the problem. One reason that the HIV counseling and testing infrastructure in developing countries is weak is that, in the absence of affordable therapies, there are only limited reasons to improve it. But, if effective therapy were more widely available, there would be an incentive to improve the infrastructure. Adherence is a problem in the United States as well. Even in the controlled setting of a clinical trial, non-adherence rates of 25% have been observed." Should we therefore apply the same logic to some US populations? Imagine if someone tried to make that argument with respect to all drug users or particular socioeconomic sectors of the United States. ●Is the real concern that resistant strains from the developing world will enter the US? If so, is the pharmaceutical industry really arguing that Africans should remain untreated so that Americans can live longer? In sum, on both policy and virological grounds, the possible emergence of drug-resistance strains provides no support for arguments against compulsory licensing and parallel imports. The R&D Scare Card Tom Bombelles of PhRMA has also asserted that "compulsory licensing creates an active disincentive to research-based pharmaceutical industry involvement in the international effort to improve public health in developing countries, as countries will choose not to develop medicines which will not be patent-protected. Such disincentives are more likely to drive patients and the availability of medicines further apart." 13 This seems to argue that patients in developing countries should wait patiently without existing drugs while companies develop other drugs that may eventually be affordable in developing countries. The history of international drug development teaches us that this is likely to be an empty promise. Once again, the pharmaceutical industry is playing its R&D Scare Card. This is an empty threat: pharmaceutical company R&D expenditures almost doubled between 1990, when Congress imposed price restraints on Medicaid drugs, and 1995." R&D represented a median of 11.4% of sales for the top 10 pharmaceutical companies (ranked by revenue) in 1998.15 In contrast, profit (net income) represented a median of 18.6% of sales by those same companies in 1998. Furthermore, the pharmaceutical industry is the most profitable in the United States, whether measured by return on sales, assets or equity. Since 1989, pharmaceutical company return on equity has been at least 1.7 times the median of all U.S. industries."7 Given the extraordinary profits generated by the pharmaceutical industry, and its failure to make many critical medications affordable for developing country patients, we urge you to call the R&D Scare Card bluff. Conclusion Neither the viral resistance nor the R&D scare card arguments provides support for opposing legal trade measures such as compulsory licensing and parallel importing. The explanation for the pharmaceutical companies' opposition is to be found elsewhere: in their desire to not have their irrational pricing practices exposed. We suggest that providing potentially lifesaving drugs to residents of developing countries should take a higher priority. 1. Compulsory licensing allows local production of patented medications with a royalty to be paid to the patent holder. 2. Parallel importing allows countries to find the lowest price for a particular drug on the international market, rather than being required to purchase from the manufacturer at a higher price. 3. World News Tonight with Peter Jennings (6:30 PM Eastern Time), July 8, 1999 (rush transcript). 4. Yerly S, et al. Prevalence of transmission of zidovudine-resistant viruses in Switzerland. Schweiz Med Wochenschr 1996;126:1845-88. 5. Hirsch MS, et al. Antiretroviral drug resistance testing in adults with HIV infection: implications for clinical management. JAMA 1998;279:1984-91. 6. Wahlberg J, et al. Apparent selection against transmission of zidovudine-resistant human immunodeficiency virus type 1 variants. J Infectious Disease 1994;169:611-4. 7. Bayer R, Stryker J. Ethical challenges posed by clinical progress in AIDS. Am J Public Health 1997;87:1599-602. 8. Bangsberg D, et al. Protease inhibitors in the homeless. JAMA 1997;278:63-5. 9. Wilkinson D, et al. Directly observed therapy for tuberculosis in rural South Africa, 1991 through 1994. Am J Public Health 1996;86:1094-7. 10. Davies GR, et al. Twice-weekly, directly observed treatment for HIV-infected and uninfected tuberculosis patients: cohort study in rural South Africa. AIDS 1999;13:811-7. 11. Lurie M, et al. Denying effective antiretroviral drugs to HIV-positive pregnant women - the national government's flawed decision. S Afr Med J 1999;89:621-3. 12. Kastrissios H, et al. The extent of non-adherence in a large AIDS clinical trial using plasma dideoxynucleoside concentrations as a marker. AIDS 1998;12:2305-11. 13. Bombelles T. Remarks before Presidential Advisory Council on HIV/AIDS, Washington, DC, June 7, 1999. 14. Pharmaceutical Research and Manufacturers Association. Pharmaceutical Industry Profile 1999, Washington, DC 1999. 15. Based on 1998 Annual Reports. 16. Fortune 500. Fortune Magazine, April 26, 1999, p. F-27. |