Pharma accepts Ecuador's decision to make cheap versions of patented drugs

Ecuador's President Rafael Correa this week declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest. Under Andean Community law, the declaration opens the door to competition from generic medicines with patented brand-name drugs, through the use of compulsory licensing. The declaration could lead to government policies that expand access to medicines.

By issuing a compulsory license, a government can authorize competition with patented products, including the importation, domestic production, distribution and/or sale of generic medicines. In exchange, licensees pay reasonable royalties to the patent holder, set by the government according to the circumstances of each case. Compulsory licenses do not 'eliminate' or 'override' patents. Instead, they authorize the use of patented technology under enumerated conditions

"We accept the democratic decision...to use this extraordinary legal measure, observing the rights and responsibilities" laid out in international law, said a group of major multinational drugmakers operating in the country, including Pfizer, Bayer and Grunenthal, as well as 11 other foreign pharmaceutical companies, in a statement through a local industry association. "No legal right of any kind can take precedence over the interests of public health," the statement read, though the companies said they did not share Ecuador's view that patents prevent health care, reports The Associated Press.

Silvana Tamayo, a spokeswoman for the pharmaceutical association, told the AP that Ecuador's government has yet to initiate royalty negotiations with companies.

President Correa says cheap generic drugs are needed to assure widespread access to medication. The decree did not specify which, or how many drugs patents could be bypassed.

The Ecuadorean Intellectual Property Rights Institute, charged with negotiating royalties with patent holders, has said payments could range from "0.5% to 10% of the cost of generic drugs" sold, and be paid monthly, quarterly or yearly.

Brazil, Thailand, Zimbabwe, Malaysia, Indonesia and Thailand are among countries that invoked the "compulsory license" procedure to import cheap generic medicines, especially American AIDS drugs. Health campaigners have praised them, noting that patients who develop resistance to older antiretrovirals need second-line drugs that can be prohibitively expensive.

Industry groups have pressured rich governments to dissuade developing nations from bypassing patents. Thailand's move prompted the USA to place the country on a copyright watch list of nations where American companies face problems protecting intellectual property rights, notes the AP. Countries on the list are under extra scrutiny and can face trade sanctions if alleged violations worsen.