Abbott and Senator Hatch lambast Global Fund's policy on generics and compulsory licensing

On 13 April 2011, Senator Orrin Hatch (Republican-Utah) wrote a letter to then-Secretary of State, Hillary Clinton complaining about Global Fund's policy on generic procurement and compulsory licensing. With respect to procurement, Sen. Hatch asserted that Global Fund monies were used to procure generic drugs "at unnecessary costs in recipient countries" while branded drugs (all Abbott products) were were available at a lower cost. With respect to compulsory licensing, Hatch asserted that "officials of the Global Fund are promoting compulsory licenses and verbally conditioning these licenses for the Global Fund grants". This letter was obtained by KEI in an investigation of recent pressures by Abbott and Senator Hatch to influence the procurement policies of the Global Fund. The April 2011 Hatch letter documents the beginning of a process of active involvement by powerful actors in the procurement policies of the Global Fund. For a detailed description of what to expect from the new Voluntary Pooled Procurement policy, please see: http://keionline.org/node/1439. At this stage, it is unclear as to whether the US Department of State issued a response to Hatch's letter.

At its outset, the Hatch letter informed Secretary Clinton that "[s]lides used by the Global Fund to brief officials on how to use compulsory licenses have been attached". Senator Hatch then proceeded to give a rather twisted reading of the TRIPS Agreement stating:

By advocating for developing countries to disregard the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) through issuing compulsory licenses to gain access to Global Fund grants, we are abusing the system.

Hatch then requested Secretary Clinton to

provide an immediate plan of action prohibiting any seminars or working groups by the Global Fund relating to educating, training and advocating for countries to issue compulsory licenses.

Hatch's communication to Clinton included a slide presentation prepared by the Global Fund for a WHO, WIPO and WTO technical symposium on "Access to Medicines, Patent Information and Freedom to Operate" held on 18 February 2011. Among the slides that may have raised Hatch's ire was slide 5 on national and international laws which encouraged primary recipients of Global Fund monies to

apply the flexibilities within national laws and in the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), as interpreted by the Declaration on the TRIPS Agreement and Public Health (Doha Declaration) to achieve the lowest possible price for products of assured quality.

In the event that a Principal Recipient does not have the requisite capacity to assess the national and international intellectual property rights that apply to the desired products in their country, it contract the necessary expertise using funds budgeted in the Global Fund grant.

The Global Fund presentation noted that that the lack of information about patent status had a chilling effect on procurement and that the management of intellectual property issues was a procurement bottleneck. The presentation stated that many principal recipients did not avail themselves of contracting the necessary technical expertise to assist them on IPR questions even though they were permitted to contract such expertise using Global Fund monies. In the concluding slide, the Global Fund noted that WHO and UNDP could provide guidance to developing countries in determining options for "procurement of low-priced generics". For Senator Hatch and Abbott, this clearly crossed the line.

Abbott is a member of the private sector delegation to the Global Fund board; multiple sources have confirmed to KEI that in September 2012, Abbott approached senior staff of the Global Fund asserting that the Global Fund encouraged principal recipients to purchase generic lopinavir+ritonavir and thus"violate" patents on its protease inhibitor Kaletra. KEI was first informed of Abbot's activities in November 2012, and received further confirmation on 11 February 2013 that Abbott was still actively lobbying the Global Fund. Furthermore, an informed source disclosed to KEI that due to intense engagement by Abbott, Senator Hatch's staff requested a meeting on 28 September 2012 with the Office of United States Global AIDS Coordinator (Eric Goosby) to discuss Abbott's concerns.

It is perhaps of interest to note that on 9 November 2012, two months after Abbott's lobbying at the September 2012 board, the Global Fund appointed a Chief Procurement Officer, Christopher Game, with extensive experience at Abbott and Novartis.

Upon his appointment, the Global Fund press release stated:

He later worked at Abbott Laboratories in the United Kingdom, leading a team of buyers and procuring raw materials and packaging, and at a generic pharmaceutical company now called Actavis.

Mr. Game became the Global Head of Active Ingredients, Packaging and Excipients procurement at Sandoz, an arm of the Novartis group, and built a track record of innovation and expert management that led to enormous cost savings. He was promoted to become the Global Head of Sourcing at the pharmaceutical division of Novartis, managing the spending of $2.7 billion and leading a team of 120 professionals worldwide, and taking the division through an effective reform process, yielding tremendous cost savings.

Mr. Game’s appointment is one of several major staff moves in recent months, as part of an organizational transformation undertaken by Mr. Jaramillo.

In light of the Abbott/Hatch tandem, it is of great interest to see how the new leadership of the Global Fund responds, particularly with respect to procurement policy and IPR policy.

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