PUBH 6331 Week 5 Two-Country Comparison Example

The Same Cure on Two Sides of a Border: A Two-Country Comparison of Hepatitis C Medicine Prices Where One Composite Country Used TRIPS Flexibilities and Its Better-Funded Neighbor Signed Away Room to Maneuver in a Bilateral Trade Deal

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Walden University

PUBH 6331: Global Health and Social Justice

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Month Day, Year

The Same Cure on Two Sides of a Border: A Two-Country Comparison of Hepatitis C Medicine Prices Where One Composite Country Used TRIPS Flexibilities and Its Better-Funded Neighbor Signed Away Room to Maneuver in a Bilateral Trade Deal

The Comparison

The direct-acting antiviral medicines that cure hepatitis C in a 12-week course are among the most effective drugs of recent decades and, at first, among the most expensive. This paper compares two composite neighboring countries. Lowland, a lower-middle-income country, used the room the World Trade Organization's intellectual property agreement leaves to governments. Highland, its upper-middle-income neighbor, accepted stricter intellectual property terms in a bilateral trade agreement with a high-income partner. Both countries face similar hepatitis C epidemics. The question is whether patent law, rather than manufacturing cost, explains why one public program pays far more than the other.

Why Manufacturing Cost Is Not the Explanation

The cost of making these medicines is low. Using export data for the active ingredients shipped from India in 2015, Hill et al. (2016) estimated that a 12-week course of sofosbuvir with daclatasvir could be produced and sold profitably for about US$200 per patient. Published prices were far higher. An analysis of 2015 ex-factory prices across 26 high-income countries found a median price for a 12-week course of sofosbuvir alone of US$42,017, ranging from US$37,729 in Japan to US$64,680 in the United States (Iyengar et al., 2016). The gap between those numbers is not a cost of production. It is the value of exclusive rights.

The Legal Room Both Countries Started With

Both countries are members of the World Trade Organization and bound by its intellectual property agreement. That agreement requires patents on medicines but leaves governments several flexibilities. The 2001 Doha Declaration confirmed that each member may grant compulsory licenses, may determine the grounds for doing so and may decide what counts as a national emergency, and it stated that the agreement should be interpreted to support members' right to protect public health and promote access to medicines for all (World Trade Organization [WTO], 2001). Countries may also set strict standards for what counts as an invention, refusing patents on minor changes to known compounds, and may allow third parties to oppose a patent application before it is granted.

Lowland's Path

Lowland's patent office applied a strict inventiveness standard and, after a civil society opposition, rejected the main patent claims on one antiviral. For a second medicine, the government issued a government-use license, a form of compulsory license that lets the state procure generics for its public program while paying the patent holder a modest royalty. The public program then bought generic regimens through an open tender. In the composite figures used here, Lowland pays about US$300 for a full 12-week regimen, close to the production cost estimate, and has treated more than 40,000 people in four years.

Highland's Path

Highland is wealthier and has a stronger health budget, but its bilateral trade agreement included what analysts call TRIPS-plus provisions: rules going beyond the WTO minimum. Gleeson et al. (2019) describe the main types: extensions of patent terms to make up for regulatory delays, data exclusivity that bars generic makers from relying on the originator's clinical trial data for a set period, and patent linkage, which stops the medicine regulator from approving a generic while a related patent is in force. Highland's agreement contained all three. Even where a patent might be weak, data exclusivity alone delays generic registration for five years. The originator company offered Highland a tiered price well below the U.S. price but far above Lowland's generic cost. In the composite figures, Highland pays about US$9,000 per course and has treated fewer than 8,000 people over the same four years, rationing treatment to those with advanced liver disease.

Table 1

Two Composite Countries Compared

Note. Country figures are composite; production cost and high-income price benchmarks come from Hill et al. (2016) and Iyengar et al. (2016).

Reading the Comparison

The richer country treats fewer people at a much higher price. Its health ministry did not choose this outcome; its trade ministry did, years earlier, in negotiations where medicine prices were one item among many. The poorer country had less money but more legal room, and it used that room. Iyengar et al. (2016) found that in 12 of the countries they studied, a course of sofosbuvir alone cost a year or more of the average annual wage, which shows how quickly the price determines who can be treated when public programs cannot afford to cover everyone.

What This Means for Justice

The comparison suggests that access to medicines depends heavily on decisions made outside the health sector. If the right to health asks states to ensure access to essential medicines, then trade negotiators who sign away flexibilities may be making health decisions without health accountability. A fair argument must also recognize the other side: patent protection is meant to reward the investment that produced these drugs, and originator companies argue that strict protection sustains future research. The comparison does not settle that debate. It shows who bears the cost when a country gives up its room to act: in Highland's case, people with hepatitis C who will wait until their livers fail before they qualify for a cure.

What Highland Could Still Do

Highland's room to act is narrower but not gone. The flexibilities confirmed at Doha still apply to it, so a government-use license remains possible, although a bilateral agreement may make officials reluctant to use it for fear of trade retaliation. Highland could also negotiate a volume-based price with the originator, publish what it pays so that neighboring countries can compare, or join a pooled purchasing arrangement. Each option carries political costs that Lowland did not face. The comparison therefore shows not only how prices differ but how a past trade decision raises the cost of every future health decision.

Limits

Lowland and Highland are composite, built from patterns reported across many countries rather than from two real ones, so their figures illustrate a mechanism rather than measure it. Differences in diagnosis rates, health system capacity and political will also shape how many people are treated.

References

Gleeson, D., Lexchin, J., Labonté, R., Townsend, B., Gagnon, M.-A., Kohler, J., Forman, L., & Shadlen, K. C. (2019). Analyzing the impact of trade and investment agreements on pharmaceutical policy: Provisions, pathways and potential impacts. Globalization and Health, 15(Suppl. 1), Article 78. https://doi.org/10.1186/s12992-019-0518-2

Hill, A., Simmons, B., Gotham, D., & Fortunak, J. (2016). Rapid reductions in prices for generic sofosbuvir and daclatasvir to treat hepatitis C. Journal of Virus Eradication, 2(1), 28-31. https://doi.org/10.1016/S2055-6640(20)30691-9

Iyengar, S., Tay-Teo, K., Vogler, S., Beyer, P., Wiktor, S., de Joncheere, K., & Hill, S. (2016). Prices, costs, and affordability of new medicines for hepatitis C in 30 countries: An economic analysis. PLOS Medicine, 13(5), Article e1002032. https://doi.org/10.1371/journal.pmed.1002032

World Trade Organization. (2001). Declaration on the TRIPS agreement and public health (WT/MIN(01)/DEC/2). https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm