Arbitration should be part of the solution

There's no doubt about it Health Minister Tony Clement has a tough job ahead in living up to a promise to find out why Canada has failed to deliver on a pledge to get low-cost AIDS drugs to countries in need and to fix the problem.

There clearly are some critical hurdles to be overcome, not the least of which is the longstanding mutual antipathy and distrust existing between the brand-name and generic drug industries.

However, they also include a lack of financial incentives for generic drug companies; a cumbersome process for the generic industry to obtain licences to produce the drugs and, more recently, low-cost competition from a generic manufacturer in India.

Speaking during a session on vaccines at the International AIDS Conference in Toronto, Clement acknowledged that after two years, "not a single pill has flowed through the system and got to the people who need it. We need legislation that works."

The minister said everything is on the table, including forcing brand-name companies to relinquish their patents through the government issuing compulsory licences.

Ariel Katz, a University of Toronto professor who studies intellectual property and competition law, said money is at the root of the problem. "It may be good for generic companies to get involved in this if they can win some points on the PR front, but if it's not going to make any money, then why bother?" He said that for most generic drug makers, navigating the existing legislation isn't worth the effort.

One generic firm, Apotex, has already spent millions on developing a suitable drug cocktail that it proposes to sell to Doctors Without Borders for about 38 cents a pill. But after months of negotiations, Apotex is at a stalemate with giant drug maker GlaxoSmithKline to include the drug Zivudine in a new triple-pill antiretroviral that could extend the life of AIDS patients for several years.

For one thing, everything from shape and colour to markings and packaging, tablets or capsules produced for export can't in any way resemble those sold in Canada by the brand-name drug makers. "If you're going to make the pill blue if the brand-name version here is white, you have to show that the new

coating still dissolves properly in the stomach and that the chemical compound of the drug doesn't change," David Windross, an executive with generic drug maker Novopharm Ltd., told the Toronto Star, adding: "It just adds another layer of research."

The legislation currently caps the price at which generic drug makers sell medicines to Africa at 25 per cent of what brand-name companies charge in Canada. Under the legislation, a company that wants to export a generic drug to Africa, where an estimated 25 million people south of the Sahara are believed to be infected with HIV, needs Health Canada approval even though it will never be sold here. Next, a company must request a voluntary licence from the drug's patent holder and negotiate for at least 30 days.

If the patent holder resists, the government can grant a compulsory licence. But AIDS activists note that the legal wrangling has no limit. Most brand-name drug companies and their generic rivals are often ensnared in legal battles over more popular for-profit drugs; industry sources say it's doubtful any companies would ever reach an accord on a so-called voluntary licence, even if the medicines were sent to Africa.

Clement said the Conservative government intends "to do this comprehensively, do it rationally to get some good information and advice because really this is our first opportunity as a new government to consider this legislation."

But Stephen Lewis, the United Nations special envoy for HIV/AIDS in Africa, was skeptical of when the review will be held.

As we see it, the missing link in the federal legislation is the absence of any realistic provision to deal with the sort of impasse we find between Apotex and GlaxoSmith Kline.

Although the requirement of voluntary negotiations strikes us as reasonable, we think the law should give the parties a maximum of 60 days to reach agreement, failing which an arbitrator would be appointed to impose a solution within a further 60 days, during which the generic manufacturer could commence production.

The imposed solution would at least start saving and/or prolonging lives.