Al-Ahram Weekly, Cairo, 3-9 March 2005

Drug deal gone bad

A simple legal dispute almost developed into a full-fledged political crisis, Niveen Wahish finds out

Like it or not, Egypt is a signatory to the Trade Related Intellectual Property Rights (TRIPS) agreement, and as of 1 January 2005 had to be fully compliant with all its stipulations.

The TRIPS agreement came into force in 1995 after the establishment of the World Trade Organisation (WTO) in 1994. However, an extension until 2000 was granted to developing countries to bring their national laws into compliance with TRIPS requirements. A further five-year transitional period, until 2005, has been granted for pharmaceuticals. Egypt, along with other developing countries had chosen to take the full grace period permitted under TRIPS, buying time in an attempt to prepare itself for the effect of full implementation.

But it seems that no grace period is enough to prepare for that implementation. This month the first dispute arose since the TRIPS stipulations on patents came into force. A group of US companies, represented by the Pharmaceutical Research and Manufacturers of America (PhRMA) expressed concern regarding approval by the Egyptian Ministry of Health for some 500 generic versions of patented drugs. They claim that by doing so the Ministry of Health violated provisions that provide for the protection of undisclosed information.

However, the Egyptian Ministry of Health has denied such accusation. For starters, the minister of health has been quoted as saying only 41 pharmaceutical products have been registered since the beginning of the year. Furthermore, Hossam Lotfi, vice-dean of the Faculty of Law at Beni Sweif University and an IPR expert certified by the World Intellectual Property Organisation differentiated between data exclusivity and undisclosed information. He explained that the Egyptian law provides for protection of undisclosed information along with data exclusivity.

Data exclusivity provides for a period of protection during which the test and clinical trial data of one company may not be used by another company to obtain a marketing authorisation of the same drug. Data exclusivity would then ensure that such data may not be referred to for marketing approval for a given number of years. The Egyptian law has set that figure as five years, modelled on the North American Free Trade Agreement.

He pointed out that the Ministry of Health is under no obligation to apply the chapter related to undisclosed information on such data exclusivity if that information has been disclosed lawfully. Only if the Ministry of Health has requested additional data from the company is there an obligation to protect that data against unfair commercial use.

Furthermore, he said the Ministry of Health need only ensure the data presented to it is not copied from the data in its possession, but it is not its role to otherwise verify the authenticity of that data. To date, the Ministry of Health has not been requesting any additional information which may be considered confidential.

Lotfi pointed out that this issue can not be solved except on a case-by-case basis where each product is examined separately, particularly since the companies do not have any proof that Ministry of Health had asked them for that information, nor that it has disclosed it to other companies.

That is exactly what the different parties have decided to do. Last week, during a meeting with the minister of health they agreed that the matter be resolved through legal experts.

Lotfi elaborated that if a product is protected by a patent, it can not be protected by undisclosed information as well. This means that if a product is already off patent or expired, the company which originally owned the patent can not continue asking for its protection within the framework of data exclusivity.

The dispute has grown out of proportion since PhRMA brought their complaints to the US government by sending a letter to US Trade Representative Robert Zoellick with their complaint, hoping to impose political pressure on the Egyptian government to resolve this issue. Egypt has been seeking the start of negotiations for the establishment of a free trade area with the US for years, and intellectual property protection was among the issues that were often cited as one of the preliminary conditions required by the US government but viewed as insufficient in Egypt.

The local pharmaceutical industry was offended by the way PhRMA handled the situation and called for the boycott of US pharmaceuticals. Zakaria Gad, head of the Pharmaceutical Syndicate called the PhRMA move "political blackmail" and that there was no violation of TRIPs.

The action by American manufacturers was viewed as aiming to limit output by the Egyptian pharmaceutical industry.

Ahmed El-Hakim, head of the Egyptian Association for Research and Manufacture of Pharmaceuticals, which includes the members of the research-based pharmaceutical companies operating in Egypt, said the problem is that the drugs that have been approved are not announced by the Ministry of Health. "Maybe the undisclosed information of these drugs is already in public domain," he said. He too acknowledged that this issue has to be dealt with on a case-by-case basis.

The premises for this protection, according to El-Hakim, is that the companies spend a lot of time, effort and money to acquire this data and have the right to retrieve their costs. It is estimated that the development of one new patentable drug today costs between $250-400 million.

"If Egypt seeks to attract investments, he said, it has first to satisfy existing investors." He added that calls to boycott have failed before because the patients and the doctors know what is best for them.

The application of TRIPs has always meant for the public that medicines will become prohibitively expensive for average-income individuals. However experts point out that TRIPs stipulations apply only to new products, while everything else is already in public domain. Mustafa El-Hadary, former head of the Pharmaceuticals Planning and Policies Centre affiliated with the Ministry of Health, said that 93 per cent of the Egyptian market’s needs is covered.

The problem will be with newly discovered medicines, either for new ills or new treatments for existing ills. Egypt’s medicine bill is currently LE6.5 billion in 2005, which could increase by 12 to 15 per cent in the next two years. This dispute highlights the need to upgrade the local pharmaceuticals industry. Another solution presented by Lotfi is to applying the prescription system to ration consumption and allow for an efficient health insurance system.

The main impact of introducing patent protection for pharmaceutical products is that all production based on imitation of patented products will have to cease or be carried out under licensing agreements.

Under TRIPs, patent protection lasts at least 20 years from the date the application is filed. With the protection of patents, imitation will cease, meaning that local firms’ share of total domestic sales will fall, while that of foreign firms based in Egypt, as well as the value of imports, will increase.