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Popovich L.D. IS THE IMPLEMENTATION OF TRIPS FLEXIBLE PROVISIONS POSSIBLE IN RUSSIAN

Popovich L.D., Potapchik Ye.G., Pusacheva Yu.V. HIV AND AIDS IN RUSSIA: EVALUATION OF

SOCIOECONOMIC COSTS, EFFICIENCY OF DRUG THERAPY, AND IMPROVEMENT OF

INSTITUTIONAL BASE FOR HIV-INFECTION CONTROL... .. : - ʅ..

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5,

IS THE IMPLEMENTATION OF TRIPS FLEXIBLE PROVISIONS POSSIBLE IN RUSSIAN

Russias joining the WTO has given our country possibilities, many of which are not exercised, and it is rather reckless. A WTO documents portfolio includes the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

It contains a number of flexible provisions in regard to public healthcare which can be used to improve access to medicinal products.

In addition, the Doha Declaration on Financing for Development adopted by the heads of governments and countries in Qatar in December 2008 contains a very important provision. It says that if a country has a special need in drugs, the country can be granted by the right holder of patented products a so-called compulsory license for a local manufacturer to produce them. Previously this right was connected with pharmaceuticals against AIDS/HIV, the epidemics of which had been rapidly growing in African countries. However, India has been actively exercising this waiver from intellectual property rights and it is not the only one. The Doha Declaration also says that these drugs can be manufactured only for domestic consumers. But when the country is small, the profitability of such manufacture is very low and the market can be expanded to other countries provided that special procedures stipulated in the Declaration are followed.

However, when we joined the WTO we had not included those special flexible possibilities of the TRIPS Agreement and, in general we have not considered the possibility of compulsory pharmaceutical licenses, although there are convincing examples of other countries, Canada, for instance. This mechanism had been applied for quite a long time there and allowed to significantly reduce prices to innovative drugs. When Canada dropped out of this practice under the pressure of transnational corporations, the drug prices went high up showing how important it is to keep the competitive pressure in this industry. The right to compulsory licensing was also exercised by the United Kingdom purchasing products patented in Italy. It was called Orders for the Crown and they were justified by public reasons to increase the availability of drugs in terms of price. It is not all. In annexes to the Doha Declaration there is section 6 in regard to the cases when parallel importing is admitted. It is used when a patented drug product is very expensive in a country and it is impossible to provide patients with it and some third country manufactures this product cheaper under the compulsory licensing. And if your country adopts an international doctrine of property rights exhaustion, this product can be purchased from this third country without breaching any intellectual property rights.

Only a regional right to property exhaustion in regard to Belarus and Kazakhstan, i.e. the Customs Union members, is adopted in Russia. The non-use of this right in regard to other countries strikes the pharmaceutical market as well as the economy in a whole. Recently Skolkovo experts have analyzed this situation and concluded that parallel importation which could enable our innovative companies to buy licensed equipment cheaper, would give a huge impact to our countrys innovative development. This right is not prohibited from exercising by countries which need it. In order to do so we should introduce the international principle of exhaustion of property rights.

The Federal Antimonopoly Service has been urging for this principle to be introduced for a long time and to do so we need to make amendments to the Civil Code and a number of other legal acts. However, this proposal also has its opponents.

They say that the Russian Federation risks to lose Western investments as the result of this principle as the investors intellectual property rights will not be protected. However, experience in India shows that this principle in the domestic legislation had no impact on major foreign companies wish to invest in it.

Besides, for some purpose our patent legislation has the possibility of so-called evergreen patents. When the patent is about to expire, a products formulation, application method or manufacturing technology can be modified a little for the patent to be renewed again and again. For a long time in India, for example, a manufacturing process but not the product itself had been patentable. It made it possible to study a new products molecule by reverse engineering, to understand how it is made and without any patent rights breach to start its independent manufacture of the product. In last 10-15 years it enabled India to become a worlds leading importer of cheap innovative products and provide this country and other developing countries with these products.

Now India has changed its patent rules under the pressure of pharmaceutical giants but still giving consideration to the countrys interests. New forms of known molecules, any formulations of known substances, new application methods of known products, insignificant modifications in manufacturing processes when they do not result in significant increase of efficacy (an applicant shall provide evidence thereto) are not patented. That is why there is no evergreen patents there. All judicial proceedings have confirmed that India has not violated TRIPS provisions in those cases.

We have made chapter four of the Civil Code regulating international property rights very inflexible. It expands the definition of patentability reasons but it lacks the possibility of parallel importing as it does not have the international rule of property rights exhaustion. The right to compulsory licensing is stipulated only for military orders.

Arguments like Russia is not a developing but a developed country and such mechanisms are not suitable for us are beneath criticism. If we lack funds to provide all patients in need with advanced treatment and we think of our people, any

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methods permitted by law are good enough. They can be used at least for a limited time period or in relation to a limited range of drugs and medical technologies.

Only a regional right to property exhaustion in regard to Belarus and Kazakhstan, i.e. the Customs Union members, is adopted in Russia. The non-use of this right in regard to other countries strikes the pharmaceutical market as well as the economy in a whole.

TRIPS an Agreement on Trade-Related Aspects of Intellectual Property Rights which is a part of WTO documents portfolio. The Agreement establishes minimal standards for recognizing and the protection of main intellectual property objects and opens possibilities to use highly effective mechanisms of dispute resolution in this sphere. TRIPS flexibility in regard to health care ensures the balance between the protection of patent holders rights and public healthcare interests.

1. HSE Basic Research program.

5,

HIV AND AIDS IN RUSSIA: EVALUATION OF SOCIOECONOMIC COSTS, EFFICIENCY OF DRUG THERAPY,

AND IMPROVEMENT OF INSTITUTIONAL BASE FOR HIV-INFECTION CONTROL [1]

The propagation of HIV infection with subsequent AIDS-caused mortality has a multifactor destructive impact on all economic subjects, beginning with the level of households and ending with the level of national economy as a whole.

The propagation of HIV infection epidemic, first of all, affects demographic determinants, resulting in the reduction of population and expected lifespan. The transmission of HIV infection via heterosexual contacts causes a predominant contamination of young population. The growth of general mortality among persons of childbearing age leads to a decline of birth.

A large-scale HIV infection epidemic may aggravate demographic problems for the countries with a negative population growth, such as Russia.

The deepening of HIV infection epidemic leads to reduction in the quality of work force. HIV-positive people, having cognizance of impending death, lose interest in the improvement of professional skills and in the education, which substantially decreases their work performance.

The propagation of HIV infection epidemic leads to an increase in the government expenditures for public health and social welfare. Medical assistance for HIV-infected people, including expensive drug therapy and hospital treatment of endstage disease and preventive epidemic countermeasures, requires raising extra funds and redeploying available healthcare resources.

In addition to qualitative assessments, the quantitative estimations of a social burden of HIV/AIDS have been conducted in the different countries. They show that the structure of social cost of HIV infection differs from that for other diseases, having considerably higher fraction of indirect costs than in the case of other diseases. The production losses are largely caused by relatively tender age of AIDS occurrence and relatively early premature mortality. The studies confirm that the losses of aggregate human capital as a result of HIV-caused mortality are considerably higher than for any other cause of mortality, including road traffic accidents, apoplectic attack and infarction, that is connected with an inferiority of the age of death[2].

According to the estimate by Canadian scientists, the indirect costs of HIV infection exceed the direct costs in 2. times [3]. The similar results have been obtained in the studies of American [4], Chinese [5], Indian [6] and Australian [7] researchers. The results of the analysis of aggregated welfare costs caused by the propagation of HIV infection in 25 European countries [8] show that the total welfare costs amounted to about 16% of the annual GDP of all the countries over a period of 1995-2001 for the entire region. Very high levels of the welfare costs per capita are observed in Ukraine, Russia, Belarus, Kazakhstan, and Moldova.

The economic impact of HIV infection has been studied in Russia by various organizations, mostly early in the 21st century (World Bank [9], International Labor Organization [10], and United Nations Development Programme [11]. The obtained estimates of the impact of HIV epidemic on the macroeconomic indicators differ depending on the specific models used, but there is a consensus of opinion among the researchers that the national GDP can be reduced by not less than 5% by 2050 as a result of the propagation of HIV epidemic in Russia.

In 2013, the HSE National Research University made a detailed estimation of the socioeconomic burden of HIV for Russia. The estimation covered only material costs. Moreover, only government expenditures were taken into account, ignoring any expenditure of citizens, businesses, international organizations, charitable contributions, etc. The direct cost components included both medical costs (for medical attendance and secondary prevention) and other costs (investment in the prima

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ry prevention, research, development of a network of HIV prevention and control centers, etc.) The indirect cost components included the expenditures in connection with the absence at work place as a result of temporary disability due to illness and social costs in connection with premature death of AIDS patients.

Federal and regional budget expenditures for the acquisition of diagnostic tools and antiviral Expenditures for ambulatory care of HIV-infected patients and secondary prevention 3,331. Developing a unified system of monitoring and assessment in the sphere of prevention of HIV Purpose-oriented contribution to the Joint United Nations Programme on HIV/AIDS (UNAIDS) 21. Moreover, the HSE National Research University made the estimation of potential reduction of socioeconomic costs as a result of early ARV therapy of all HIV-infected adult patients (except for end-stage AIDS patients). The model assumed that the infected people would receive early ARV therapy irrespective of CD4 level, immediately after making the HIV diagnosis. As a result, the model enabled to show that the total number of potentially prevented cases of infection could be 34, under such conditions, primarily due to a significant reduction in the rate of HIV transmission among serodiscordant pairs. The study shows that early ARV therapy will change the development trend of HIV/AIDS epidemic in Russia to more favorable one, resulting in the prevention of loss of more than 342 thousand man-years of life in the planning horizon till 2020.

However, the HIV/AIDS epidemic is currently propagating in the Russian Federation at the increasing rates [13].

Moreover, it is necessary to consider that, in connection with the termination of the Federal purpose-oriented program "The prevention and control of socially significant diseases (2007-2012)", at the present the measures on HIV/AIDS control, including the purchase of diagnostic tools and antiviral drugs, must be financed within the framework of the Program of healthcare development till 2020. The regional executive bodies are responsible for all the matters of raising funds for a sufficient financing and achieving the established indices. This means that Russia does not provide for implementing the whole packages of measures, which are recommended by the Joint United Nations Programme on HIV/AIDS (UNAIDS) Strategy-2015 [14].

The current decentralization and fragmentation of infection control can significantly affect the existing inefficient policy in the sphere of HIV/AIDS control in Russia. It is obvious that efficient control of this infection cannot be provided without the formulation of the unified national policy/strategy and the creation of unified high-level coordinating organ and unified system of monitoring and assessment of HIV/AIDS-related activities. Thus, first of all, it is necessary to synchronize the measures planned in Russia [15] with the UNAIDS proposals. Under the conditions of increasing shortage of resources it becomes more important to join together efforts of all potential participants in the process and to generate an integrated approach both at the level of federal authorities and in the regions.

In this connection the estimations of the socioeconomic costs of HIV/AIDS epidemic and the benefits from the investment in early ARV therapy for the economy of Russia can become additional argument for decision makers in the sphere of public health.

1. HSE Basic research program.

2. Hanvelt, Robin A., et. al., "Indirect Costs of HIV/AIDS Mortality in Canada," AIDS 8 (10), 1994.

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3. Health Canada, Economic Burden of Illness in Canada 1993, Ottawa, 1997, Table 1, page 9.

4. Hutchinson AB. Et al., The economic burden of HIV in the Unites states in the era of highly active antiretroviral racial and ethnic differences, J Acquir Immune Defic Syndr.,2006, Dec. 1; 43 (4):451-7.

5. The Socioeconomic Impact of HIV/AIDS in China, Research Team The Socioeconomic Impact of HIV/AIDS, August 2002.

6. Sanghamitra D. et al., Economic cost of HIV and AIDS in India: Integrating Mental Health in Welfare Evaluation, The World Bank funded study, Indian Statistical Institute, New Delhi, July 2007.

7. The impact of HIV/AIDS in NSW mortality, morbidity and economic impact: Health Outcomes International Pty Ltd in association with the National HIV Centre in HIV Epidemiology and Clinical Research, December 2007, www.health.nsw.gov.au.

8. Fimpel J. and Stolpe M., The Welfare cost of HIV/AIDS in Eastern Europe: An Empirical Assessment Using the Economic Value-of- Life Approach, www.ssrn.com/abstract= 9. Ryull K., Pokrovsky V., Vinogradov V., The Economic Impact of HIV-Infection Propagation in Russia, World Bank, May 2002, www.worldbank.org.ru 10. Misihina S., Pokrovsky V, Mashkilleyson N., Pomazkin D. A model of social policy costs of HIV/AIDS in the Russian Federation, ILO, 2003.

11. S. Sharp, The Economic Impact if HIV and AIDS in Russia, Current Trends and Perspectives, UNDP.

12. With consent of the authors.

13. Federal Center for AIDS Prevention and Control www.hivrussia.ru/stat/index.shtml.

www.unaids.org/en/media/unaids/contentassets/documents/unaidspublication/2010/JC2034_UNAIDS_Strategy_en.pdf 15. Resolution of the RF Chief state sanitary inspector "On the immediate measures for the prevention of HIVinfection propagation in the Russian Federation", No. 16 of February 13, 2012.

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