Customer Logins

Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.

Customer Logins

My Logins

All Customer Logins
Same-Day Analysis

Kaletra's Compulsory Licence Divides Opinion in Ecuador

Published: 07 May 2010
Just weeks after Ecuador's Institute of Intellectual Property granted ritonavir's compulsory licence to Cipla's partner Eskegroup in Ecuador, opinion remains divided in the country as speculations on the implications of this move remain uncertain.

IHS Global Insight Perspective

 

Significance

On 14 April, Ecuador's Institute of Intellectual Property issued ritonavir's compulsory licence to Cipla's partner Eskegroup in Ecuador, representing the first of its kind in the country.

Implications

The implications could be reflected in different areas, which include the current and future business context in Ecuador, the role of this event as a possible precedent locally and in the region, as well as its consequences on the access and quality of treatment for the population.

Outlook

U.S. major Abbott is expected to maintain its presence within the country despite the possible consequence of this measure upon its local business. The company is expected to look for national and international legal foundations to appeal IEPI's decision. Nevertheless, it is very unlikely that IEPI will reverse the licence.

On Wednesday (14 April) Ecuador's Institute of Intellectual Property (IEPI) issued the country's first compulsory licence to U.S. major Abbott's HIV/AIDS anti-retroviral (ARV) drug ritonavir, one of the components of Kaletra (lopinavir + ritonavir). The compulsory licence was granted to Eskegroup, local partner of Indian generic firm Cipla. This licence provides low-cost generic options for the exclusive use of the public sector until the expiration of the medication's patent, set for 30 November 2014.

The case is currently handled with extreme confidentiality at the level of general management and with the involvement of legal advice. This has been reflected in the lack of national media coverage as well as in comments from Abbott or the Association of Pharmaceutical Industries of Development (IFI). IHS Global Insight contacted Ricardo Lama, Medical Director of Abbott International in Ecuador, who declined to comment without prior authorisation from headquarters.

Timeline of Events

The timeline of events prior to the granting of the compulsory licence of ritonavir is outlined below.

Timeline

Date

Event

23 October 2009

President Rafael Correa issues Executive Decree 118, which declares drug access as a public interest and allows compulsory licensing for common and priority treatments (see Ecuador: 26 October 2009: President Signs Decree to Ban Drug Patent Rights in Ecuador).

5 January 2010

Eskegroup presents application for a compulsory licence of ritonavir.

15 January 2010

IEPI's president decides to introduce an "Instructive for the Concession of Compulsory Licences for Pharmaceutical Patents" through resolution 10-04-P-IEPI, which specifies the guidelines for this process (see here for guidelines,in Spanish).

3 February 2010

IEPI requests Eskegroup to follow the application guidelines specified on the instruction.

19 February 2010

Eskegroup presents required information to apply for the licence; sets a maximum price of US$29.40 for a package of 30 tablets (110 mg). On 9 April and 12 April it sets final prices and presentations for the product:

- Lopimuine (lopinavir 200 mg + ritonavir 50 mg; 120 tablets): US$68.00 maximum price;

- Lopimuine paediatric tablets (lopinavir 100 mg + ritonavir 25 mg; 120 tablets): US$38.00 maximum price;

- Lopimuine paediatric solution (lopinavir 80 mg + ritonavir 20 mg; 120 ml.): US$24.00 maximum price.

4 March 2010

IEPI accepts Eskegroup's application and informs Abbott of its decision.

10 March 2010

IEPI requests the Ministry of Health to confirm that ritonavir is a drug for human use to treat priority conditions affecting the Ecuadorian population and the country's public health.

11/23 March 2010

Abbott requests 60 days to present its arguments against the compulsory licence.

30 March 2010

Former minister of health Caroline Chang confirms that ritonavir is a priority treatment to secure Ecuador's public health.

13 April 2010

Abbott requests the partial revocation of IEPI's ruling to proceed with the resolution as a result of its pending request for 60 days to present its arguments as well as the pending presentation of the Ministry of Health's required report according to the instructive of 15 January.

Source: IEPI

Legal Context in Ecuador, Divided Opinion

In an interview with IHS Global Insight, Andrés Ycaza Mantilla, president of IEPI, stated that Ecuador's resolution follows in line with a series of international and national legal frameworks which include:

  1. Article 31 of the WHO's (World Health Organization) TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement;
  2. Decision 486 of Article 65 of the Andean Community (CAN; 2000);
  3. Article 154 of the National Intellectual Property Law (1998);
  4. Decree 118 (23 October 2009), which provides the judicial link to implement compulsory licensing processes as specified by international guidelines.

According to Icaza, the granting of the compulsory licence in Ecuador reflects the decision of the government to simply "apply the law" in order to secure drug access in the country. Furthermore, he stated that compulsory licensing is an "intrinsic mechanism" of the patent system itself, and can be applied by each government on its own judgment considering the national context and the national and international legal framework. Meanwhile Icaza stated that Abbott will benefit from unexpected monetary compensation following this process, reaching US$0.04 per tablet for ritonavir 100 mg, US$0.02 per tablet for Lopimuine adult version, US$0.01 per tablet for the paediatric solid version and US$0.0082 for the paediatric oral solution.

Meanwhile, in an interview with IHS Global Insight, Dr Jose Meythaler, a prominent lawyer in Ecuador who has participated in several legal cases for multinational pharmaceutical firms in the country and serves as consultant for the IFI, presented a different view of the event. According to Meythaler, compulsory licensing has a national and international legal foundation. As such, as long as governments follow those guidelines, pharmaceutical companies accept its use. However, looking at this specific case, IEPI's decision could be considered as an "arbitrary act and incompatible with international law". The main reasons are a focus on the lack of an "emergency" situation to justify this measure as well as Eskegroup's previous negotiation with Abbott before the application.

Outlook and Implications

The implications of this event could be reflected in various different areas, which include the current and future business context in Ecuador, the role of this event as a possible precedent in the country and the region, as well as its consequence on the access and quality of treatments for the population.

While representing a small market, the pharmaceutical sector in Ecuador has experienced an impressive rate of growth in recent years (14% year-on-year growth in sales for 2008) and is mostly dominated by multinational firms and branded products (although in 2009, the tendency started changing in favour of generics; see Ecuador: 5 January 2009: Boost on Drug Sales in Ecuador and Ecuador: 10 April 2009: Multinationals and Branded Drugs Top Pharma Market Sales in Ecuador). In fact, there are around 243 pharmaceutical firms in the country, of which 177 are foreign and control 78% of the market (2008). As such, it is very unlikely that pharmaceutical firms will opt to leave the country on the possibility of further compulsory licences. Looking specifically at Abbott, the company is not expected to cut its business within the country. However, as stated by Dr Meythaler, it is very likely that the firm will seek to appeal IEPI's decision relying upon national and international legal guidelines. Nevertheless, it is very unlikely that IEPI will ultimately reverse the licence.

Looking into the role of this event as a possible precedent in the country, according to Dr Meythaler, there are approximately 14 drugs that could receive a compulsory licence in Ecuador. The final outcome of this first process could influence any possible future actions of this type as well as the approach that IEPI and the pharmaceutical firms adopt in the process. Furthermore, bringing a regional perspective, while Ecuador does act as an example to other countries such as Colombia, who has sought to issue a compulsory licence on Kaletra for a long time, each country has its own needs, requirements and legal foundation, which brings different contexts and possibilities for issuing such licences (see Colombia: 1 September 2009: Colombian Government Investigates Abbott's Compliance with Kaletra's Official Price). Meanwhile, as stated by Icaza, compulsory licences have already been in place in countries such as the United States, Canada, Brazil and European nations and have not necessarily created an "easier path" for other countries to apply this measure.

Meanwhile, looking into compulsory licences' effect on the access of treatments in the country, they represent a major factor when looking into the future of this type of process in Ecuador. This is particularly true as the country has suffered from a serious decline in the affordability and accessibility of drugs. This could be partially explained by healthcare expenditure in the country, where 51.6% comes from public funding and 48.4% comes from the private sector, from which 88% is considered out of pocket (66% is spent solely on medications). As such, conditions such as HIV, whose treatment remains fairly expansive, are expected to continue to be targeted (see Latin America: 2 October 2009: Quarter of HIV-Infected Children Lack Treatment Access in Latin America).

Related Content
  • Healthcare & Pharma Industry Analysis
{"items" : [ {"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fcountry-industry-forecasting.html%3fid%3d106594276","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fcountry-industry-forecasting.html%3fid%3d106594276&text=Kaletra%27s+Compulsory+Licence+Divides+Opinion+in+Ecuador","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fcountry-industry-forecasting.html%3fid%3d106594276","enabled":true},{"name":"email","url":"?subject=Kaletra's Compulsory Licence Divides Opinion in Ecuador&body=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fcountry-industry-forecasting.html%3fid%3d106594276","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=Kaletra%27s+Compulsory+Licence+Divides+Opinion+in+Ecuador http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fcountry-industry-forecasting.html%3fid%3d106594276","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"} ]}
Share
Top
Filter Sort