Statement Of Sen. Patrick Leahy
On The Introduction Of The Life-Saving Medicines Export Act Of 2006
May 25, 2006

Mr. President:  Mr. President, I am today introducing a bill which can be the catalyst for saving the lives or improving the health of millions of families in impoverished nations.

In far too many nations, thousands of children die needlessly each month. 

The concept of my bill – called the Life-Saving Medicines Export Act of 2006 -- is easy to summarize.

It allows U.S. companies to make low-cost generic versions of patented medicines for export to impoverished nations that face public health crises but cannot produce those life-saving medicines for themselves.

This bill is based on World Trade Organization agreements permitting nations with pharmaceutical industries to help nations in need.  

That WTO agreement was labeled by U.S. Ambassador Portman as “a landmark achievement that we hope will help developing countries devastated by HIV and AIDS and other public heath crises.” 

Apart from the pressing need for this step in humanitarian terms, passage of this bill could go a long way in improving U.S. relations with large segments of the world’s population.

On December 6, 2005, the Office of the U.S. Trade Representative announced that it “welcomes” efforts to “allow countries to override patent rights when necessary to export life-saving drugs to developing countries that face public health crises but cannot produce drugs for themselves.” 

I am concerned, however, that the Administration has taken no steps whatsoever to begin to implement that agreement.   No implementing legislation has been provided to the Hill.   I was informed just today that the Administration has “no present plans” to propose legislation to implement that international agreement.  I am disappointed with that answer but am pleased that the Administration expressed a willingness to work with me on this important effort.  I will forward my bill to them later today.

Indeed, the World Health Assembly and the World Health Organization have adopted resolutions urging all WTO member nations with a generic capability to adopt laws that implement that agreement.   

The World Bank recently issued a guide and model documents on how best to implement that international agreement.  My bill follows their model.

Like a generation ago, infectious and parasitic diseases remain the major killers of children in the developing world.  Many of these diseases -- measles, malaria, river blindness -- we can prevent or cure.  But those countries still lack the public health systems and the vital medicines.   

Every hour, more than 500 African mothers lose a child, mostly from diseases caused by contaminated water. 

In some sub-Saharan countries, HIV infection rates range as high as a third of the adult population, and for this reason 35 percent of African children are at higher risk of death than they were a decade ago. 

Despite these grim statistics, there is a brighter side.

We are far more aware today of how much our own health depends on what takes place half a world away.  Whether it is AIDS, SARS, West Nile Virus, the Avian Flu, or some as yet unknown infectious disease, we are all at risk, and only an airplane flight away, from wherever the outbreak may occur. 

Because of this new awareness, global health is finally recognized as an issue of national security.  It may seem obvious today, but even ten years ago it was not. 

Health threats that once concerned only medical personnel, now receive the attention of the highest levels of governments. 

We are supporting policies and programs to help the poorest countries conduct better surveillance and respond more quickly to protect their own people, and to prevent the spread of disease. 

There is a great deal more we need to do.  Today, 15 percent of the world’s people consume 91 percent of the world’s pharmaceuticals.   The high price of many life-saving medicines -- medicines that we take for granted in this country -- is beyond reach for billions of the world’s most vulnerable populations. 

President Franklin Roosevelt said:  "The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little."

Imagine if you, or a loved one, were dying and you knew the medicine to cure the disease exists and costs only a few dollars, but you have no way to get it or to pay for it.  That is a reality for millions of people today.

Reports by UNICEF, UNAIDS, and Doctors without Borders clearly show that the high price of many life-saving medicines is a significant barrier to their availability in many very low income areas of the world.  Indeed, the 4^th Global Report of UNAIDS notes the extremely low rate of treatment for HIV/AIDS in those areas by pointing out that of the 5 to 6 million urgently in need of antiretroviral medicines, only some 400,000 were receiving them. 

With respect to AIDS, a recent book by Philip Hilts called “Prescription for Survival” notes the importance of offering affordable medicines to populations of impoverished nations:

“It was said that the price of the drugs was killing tens of thousands . . . .”

Under my bill, U.S. generic manufacturers would be allowed to make generic versions of patented drugs without the consent of the patent holders. 

Those patent holders would receive compensation in the form of a royalty payment under a so-called “compulsory license” and the generic companies would then be required to sell those less-expensive generic drugs only to least-developed or developing nations. 

Use of a compulsory license occurs when Congress determines that there is an important need which should be addressed.

For example, most Americans do not realize that their network television programs received by satellite or by cable are provided under a compulsory license.  The program owners receive a royalty for their programs under a formula. 

This way American families can watch network TV programming over satellite or cable just like it is made available over-the-air. This same compulsory license approach, except with respect to patented medicines, is employed in this bill.   

The WTO agreement contains language designed to protect the interests of the patent holders by focusing its benefits on areas of the world where these important medicines would not otherwise be available except for some of the wealthiest residents.  

Thus, implementation of the agreement would not take business away from the companies owning the patents, sometimes referred to as the “brand-name” companies, since their medicines are not purchased by low-income families in those impoverished nations.

In addition, the patent holders will receive royalties from the generic companies under the bill.  Third, generic versions of products sold under the agreement have to be clearly marked as not for resale to developed nations.  This will mean that the bill should not result in undercutting the high-priced sales of those medicines by the brand-name companies in developed nations.

Thus, the bill addresses both the urgent needs of millions of low-income families in impoverished nations while protecting the interests of the patent owners of these life-saving medicines.   

There have been significant voluntary efforts made by brand-name pharmaceutical companies, foundations, and non-profits who have donated life-saving medicines and have donated time, personnel and money to help in the fight against deadly diseases in other nations.  I commend and greatly appreciate those efforts.

Some funding mechanisms have been started including the Global Fund to Fight AIDS, Tuberculosis and Malaria and President Bush’s Millennium Challenge Account.  Nonetheless, much remains to be done. 

If this bill is enacted it would complement the above efforts and implement the WTO agreements and make low-cost life-saving pharmaceutical products, and other medicines, available to hundreds of thousands of persons without other access to those products.

To provide a little history, I am very pleased that all the member nations of the World Trade Organization, WTO, agreed to this approach to assist people suffering from life-threatening diseases in least-developed or developing nations. Under this international agreement, nations such as the United States with pharmaceutical industries would be allowed to make and sell generic medicines to nations in need even if the patent owners of those medicines refused to authorize such manufacture and sale. 

As I said earlier, On December 6, 2005, the United States announced that it “welcomes” the WTO amendment to “allow countries to override patent rights when necessary to export life-saving drugs to developing countries that face public health crises but cannot produce drugs for themselves.” The amendment will go in effect, for those nations which adopt it, once two/thirds of the member nations adopt it.  The current waiver approach, allowing nations to implement it now, will remain in place until the permanent amendment is adopted.  This permits that U.S. to move forward with this effort this year.  Indeed, Canada has already passed implementing legislation. 

Participation by any nation which wants to export such generic products is voluntary.  In order to participate, each country must pass legislation to implement the WTO agreement. The United States needs to act as soon as possible.

This is a moral issue.  I am working with a number of religious groups, humanitarian organizations, international assistance groups, and generic drug companies on this effort.  I have also received input from some pharmaceutical brand-name companies and hope a few will step forward and be leaders in this effort.  I will also reach out across the aisle to try to form a bipartisan coalition.   

Two recent World Health Organization annual reports, the World Health Reports for 2003 and 2004, demonstrate the enormous scope of the need for supplying these medicines to needy countries.  The “Life-Saving Medicines Export Act of 2006” that I am introducing today would allow the U.S. generic industry to respond to these urgent international needs and could save millions of lives in impoverished nations.

Canada, Norway and the Netherlands have already enacted such legislation or rule changes.  However, aspects of the Canadian law have been an impediment to the willingness of generic companies to participate. For example, that law allows Canadian generic companies to provide such medicines for at most only four years.  The Canadian version permits dilatory and needless litigation, omits important medicines from a complex list of covered drugs, and creates unnecessary bureaucratic hoops. 

I have received input from generic companies and my bill addresses all of those concerns.  For example, it would provide that a participating generic manufacturer could provide such medicines for up to fourteen years which makes it much more likely that U.S. generic companies would make the investments needed to make low-cost medicines for export to impoverished areas. 

Under my bill, U.S. generic manufacturers would be allowed to make generic versions of patented drugs without the consent of the patent holders.  Those patent holders would receive compensation, a royalty payment, under a so-called “compulsory license” and the generic companies would then be required to sell those less-expensive generic drugs only to least-developed or developing nations. 

The WTO agreement contains language designed to protect the interests of the patent holders by focusing its provisions on areas of the world where these important medicines would not otherwise be available except for some of the wealthiest residents.  Thus, implementation of the agreement would not take business away from the companies owning the patents, sometimes referred to as the “brand-name patent holders since their medicines are not purchased by low-income families in those impoverished nations. There may be de minimis losses of profits for brand-name patent holders but certainly the humanitarian and self-interest benefits provided by the bill would massively outweigh those concerns. 

In addition, the patent holders will receive royalties from the generic companies under the bill.  Third, generic versions of products sold under the agreement have to be clearly marked as not for resale to developed nations.  This should mean that the bill will not result in undercutting the high-priced sales of the patented medicines in developed nations. Re-exporting of these generic products is prohibited unless it is part of a regional trade alliance among impoverished nations as permitted under the WTO agreements.

Thus, the bill addresses both the urgent needs of millions of low-income families in impoverished nations while protecting the interests of the patent owners of these life-saving medicines and will hopefully help enhance America’s image in the world.

For those only interested in self-interest rather than humanitarian aid, note that because of the globalization of travel our nation is at risk from failure to contain diseases in other nations.  America has a strong self-interest in combating diseases in foreign nations.  A surprising number of new diseases have emerged in recent years.   Some of these new diseases are variations of existing diseases. The volume of people and cargo going to and from distant nations is astounding.  According to “Rx for Survival” by Philip Hilts, if you count only travel between nations with a heavy burden of disease and those with less disease, more than a million people a week are making the trip. 

The more viruses and bacteria mutant inside animals and people, and the more people and goods travel throughout the world, the more residents living in the United States are at risk of being harmed by dangerous diseases.  

The National Intelligence Estimate of January, 2000, published by the CIA and the National Intelligence Council noted that:  “New and emerging infectious diseases will pose a rising global health threat, and will complicate U.S. and global security over the next 20 years.  These diseases will endanger U.S. citizens at home and abroad, threaten United States armed forces deployed overseas and exacerbate social and political instability in key countries and regions.” 

I hope all my colleagues will join me in supporting this effort.  Here is my section-by-section summary of the bill.

Section 1: Sets forth the name of the Act as the “Life-Saving Medicines Export Act of 2006.”

Section 2:   States that the purpose of the Act is to promote public health under World Trade Organization agreements by permitting the export of generic versions of life-saving patented pharmaceutical products and other medicines including diagnostic tools and vaccines needed to prevent or treat potentially life threatening diseases to residents of impoverished countries with insufficient or no manufacturing capacity to make the medicines.  The findings set forth determinations by the World Health Organization concerning the millions of low-income persons without regular access to medicines in lesser-developed or developing nations.

Section 3:  This section requires the Director of the United States Patent and Trademark Office to issue a compulsory license (permission to make and sell a patented product under this new Act) to permit generic companies to make and export medicines under the terms of WTO international agreements under several conditions.

The recipient country must be a least-developed nation, as defined by the United Nations, or a developing nation without the ability to manufacture the medicine in question.

The recipient country, called an “eligible country” in the bill, must notify the WTO of its interest in participating in this program.

Efforts must have been made by the generic company to buy the right to make and sell the medicine under normal business arrangements with the patent holders.

The medical product exported under this Act must be for life threatening public health problems and can only be used in least-developed or developing nations, and is not for re-export except in identified circumstances relating to regional trade alliances.

Special labeling and packaging must be used to make clear that the product is sold under the authority of the WTO agreement only for use as allowed under agreement and this bill.

The permission to make and sell the product, the license, can not exceed seven years, except that the license may be extended once.

The holder of the compulsory license shall pay a royalty to the patent holder, as determined by the Director of the PTO within a limited range of possible rates set forth in the bill, taking into account such factors as humanitarian needs, the economic value to the importing nation, and the need for low-cost pharmaceutical products by persons in the importing nation.

The maximum royalty for any shipment shall not exceed 4 percent times the commercial value of the pharmaceutical products to be exported under this Act under that supply agreement. 

An alternative royalty payment approach, modeled after the approach enacted into law by Canada, would also be permitted with the same 4 percent maximum.  In addition, the Director may accept combined applications from multiple eligible countries.  Note that in emergency situations the Director may waive provisions of the bill in a manner consistent with the WTO agreements. 

Section 4:  This section makes clear that compulsory licenses issued under this Act shall not be considered an infringement of a patent.

Section 5:  This section creates a diverse advisory board of academic, patent, trade, medical, international aid, and industry experts to advise the Director, and to report to the Congress, on ways to improve implementation of the bill to achieve its purposes.  Mandatory funding for the board is provided out of the general fund of the U.S. at $1.5 million in fiscal years 2007 and 2008, with modestly declining amounts provided in subsequent years through 2011.

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