The Ecuadorian Intellectual Property Institute has issued compulsory licences for nine drugs between 2013 and this year, with savings of between 23% and 99% on the pharmacy prices of these medicines.
IHS Life Sciences perspective | |
Significance | According to the minister of health, the nine compulsory licences issued in 2013 and so far this year have achieved savings of between 23% and 99% on the pharmacy prices of the affected medicines. |
Implications | Following legislation that was enacted in Ecuador in October 2009, drug companies have been able to apply for compulsory licences for the manufacture of any of 2,214 patented drugs that are currently marketed by multinationals in the country |
Outlook | Some pharmaceutical firms could leave the country on the possibility of further compulsory licences. |
The Ecuadorian Intellectual Property Institute (IEPI) has issued compulsory licences for nine drugs between 2013 and this year, reports the Ecuadorian health ministry. Health Minister Carina Vance announced this compulsory licences report on 29 July in a joint press conference with René Ramírez, the national secretary of higher education, technology and innovation, and Andrés Ycaza, the executive director of IEPI. According to the communiqué, the first compulsory licenses were granted in 2013 for the antiretroviral Kaletra (ritonavir + lopinavir; -22.2%, two licences) and Epzicom (lamivudine + abacavir; three licences), for the treatment of patients with HIV/AIDS. Furthermore, in April and May this year, licences were issued for Merck & Co's Arcoxia (etoricoxib) and Novartis's Myfortic (mycophenolate sodium). The former is used to treat arthritis and the latter helps recipients of kidney transplants. The latest licences were granted this month for the oncology medicines Sunitinib and Certolizumab, which treat rheumatoid arthritis.
According to the minister of health, these compulsory licences have achieved savings of between 23% and 99% in the pharmacy prices of the licensed medicines. The health minister cited the example of etoricoxib, which, in normal pharmaceutical market conditions, could cost USD0.84 per tablet, but, after the compulsory licence, its price was decreased by 99% to USD0.0084. Finally, Vance states that the country has granted the licences efficiently and based on technical and legal reasons.
A compulsory licence is an authorisation granted by the state to produce a patented drug without the permission of the owner of the patent, a possibility that was provided for in the World Trade Organization mechanism and the Doha convention. It is typically used only in emerging markets and is in theory meant to be reserved for cases of serious public health need. In essence, under a compulsory licence, an individual, state or company seeking to use another's intellectual property can do so without the right holder's consent, and pays the rights holder a set fee for the licence.
Ramírez recalls that the Ecuadorian government in Decree 118 in 2009 has established a policy of guaranteed access to medicines through decreasing costs and regulation of excessive market prices in order to generate savings for payors and patients.
Outlook and implications
Following legislation enacted in Ecuador in October 2009, drug companies have been able to apply for compulsory licences for the manufacture of any of 2,214 patented drugs that are currently marketed by multinationals in the country. Initially, the IEPI issued only three compulsory licences, all of which have been for HIV/AIDS drugs (see Ecuador: 29 January 2013: Ecuador takes on compulsory licensing agreement for production of HIV drug). Nevertheless, during the last two years, the compulsory licences have been extended to more therapeutic areas, such as oncology and arthritis treatments.
The high number of compulsory licences and the new therapeutic areas that the government has been covering with them could have negative effects in Ecuador's pharmaceutical market, which include the current and future business context in the country. As such, some pharmaceutical firms could leave the country on the possibility of further compulsory licences. Although Ecuador is a small market in Latin America compared with Brazil or Mexico, it has experienced an impressive rate of growth in recent years (14% year-on-year growth in sales for 2008) and is mostly dominated by multinational firms and branded products (although, in 2009, the tendency started changing in favour of generics; see Ecuador: 5 January 2009: Boost on Drug Sales in Ecuador and Ecuador: 10 April 2009: Multinationals and Branded Drugs Top Pharma Market Sales in Ecuador). In fact, there are around 243 pharmaceutical firms in the country, of which 177 are foreign and control 78% of the market (as of 2008).
It is important to highlight that granting compulsory licences is a continuing trend in Latin America when access to some medicines have been considered a public health emergency (see Colombia: 1 September 2009: Colombian Government Investigates Abbott's Compliance with Kaletra's Official Price and Brazil: 19 December 2013: NGO recommends compulsory licensing of AIDS drugs in Brazil). Looking at the Ecuador situation, one of the issues the country could face is that if the reasons for granting the compulsory licence in each case are examined and it is found that some licences were not triggered by a real health emergency, it would become difficult for Ecuador to justify issuing them for nine medicines in less than two years. A perception of low respect for patent rights could discourage originator pharmaceutical companies from launching in Ecuador in future.