Firms accept Ecuador breaking drug patents

“We accept the democratic decision... to legally implement this extraordinary measure,” the 14 companies including European and American giants such as Bayer and GSK said through the local pharmaceutical industry association.

“No legal right is superior to the requirements of public health, especially in such serious circumstances,” the association statement added.

Last Friday the South American nation's socialist government led by President Rafael Correa decided to break 2,214 patents, issue “compulsory licenses” to local laboratories and pay foreign labs compensation of up to 10 percent of net sales of the drugs.

According to a report from research firm Intercontinental Marketing Services (IMS), foreign firms control about 82 percent of the Ecuadoran pharmaceutical market valued at some US$720 million annually. Ecuadoran authorities, who have not indicated exactly how much compensation would be disbursed, said the de facto monopoly enjoyed by some brands led to inflated drug prices.

As an example, the president of Ecuador's Intellectual Property Institute (IEPI), Andres Ycaza, cited the case of a local laboratory requesting a license in 2002 to produce a GSK-patented antiretroviral, which prompted the British laboratory to slash the price of its drug from US$350 to US$60.

“High costs, insufficient production and a lack of research have contributed to the fact that millions of people do not enjoy equitable access to medicines in developing countries such as Ecuador,” Ycaza said.

Quito has ensured that the move is legal, citing mechanisms under the World Trade Organization which enable countries in health emergencies to compel multinationals to allow local production in the interest of public health.

Brazil and Thailand are among the countries that have broken patents on AIDS drugs in order to either produce versions of the drugs themselves or buy cheaper generic alternatives from countries such as India.

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