A Presidential Decree on 5 October 2004 opened the way for Indonesia to manufacture two generic medicines for treatment of AIDS under a compulsory licence.

Lutfiyah Hanim & Hira Jhamtani (published in Third World Resurgence 196, 2006)

INDONESIA was the second country in Asia to use the ‘government use’ option in the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The Indonesian Law No. 14 of 2001 on Patent provides for the use of compulsory licensing for a ‘non-commercial purpose’ which does not require prior negotiations with the patent holder, commonly known as ‘government use’.

Struggle for access to ARVs1

Since 2000, the HIV/AIDS epidemic in Indonesia has shifted from ‘low’ to ‘concentrated’, because in some community groups or particular regions the spread of the epidemic has reached over 5%. In March 2006, some 10,000 HIV/AIDS cases were recorded in 32 provinces of Indonesia. Of this figure, 44% were in the 20-29 years age group.

The number of people living with HIV/AIDS (PLWHA) is actually believed to be much higher. The 2006 UNAIDS report estimates that some 170,000 adults were living with HIV in 2005. One of the reasons for this gap in the figures is the poor recording system in the Indonesian healthcare service.

It is not easy for PLWHA in Indonesia to obtain ARV drugs. Since the first HIV/AIDS case was discovered in Indonesia in 1987, treatment has used patented ARVs. The price was very expensive, coming up to about US$800-1,000 per person per month. Almost no PLWHA could afford to buy them.

This prompted the Working Group on HIV/AIDS of the Faculty of Medicine, University of Indonesia (henceforth referred to as Pokdisus, its Indonesian acronym) to ask the Food and Drug Administration (FDA) to issue an ARV drug import permit through Indonesia’s Special Access Scheme in 1997. The permit was issued with a condition that the medicines would be distributed only for non-commercial purposes.

In 1999, Pokdisus negotiated with several patent-holding drug companies based in Indonesia to lower the price of ARV drugs by about 30%, which helped 79 PLWHA. By 2001, the cost of treatment was down to about US$600 per person per month, but this was still unaffordable for many poor people. As India began to produce generic ARVs in 2000, Pokdisus cooperated with an Indian NGO in 2001 to buy generic ARVs from India, which cost only US$84 per person per month (about 86% lower than the price of patented ARVs at that time).

In January 2002 Pokdisus also cooperated with an NGO in Thailand to buy generic fluconazole (an anti-fungal-infection drug that is used to prevent opportunistic infections) made in Thailand. By cooperating with these Indian and Thai NGOs, the number of PLWHA who could access non-patented ARVs increased to 464 patients.

In early 2001, Pokdisus failed in its negotiations with several patent-holder companies to reduce ARV prices. Continual appeals, even from government agencies, to these pharmaceutical corporations to lower their prices were also unsuccessful.

In October 2002, Pokdisus launched the National Movement for Improved Access to HIV/AIDS Treatment consisting of representatives of PLWHA, doctors, healthcare workers, NGOs, and reporters from all over Indonesia. The Movement set a target of facilitating access to ARVs for 2,000 PLWHA by 2003.

On 27 February 2003, the Movement signed an agreement with the state-owned drug company, Indofarma, to import generic ARVs to be distributed by Pokdisus to health centres and doctors treating PLWHA all over Indonesia.

Another state-owned drug company, Kimia Farma, was interested and able to produce ARVs, as a response to the growing crisis.

On World AIDS Day in December 2003, then Health Minister Achmad Sujudi officially launched a permit for generic ARV distribution, issued by the Indonesian FDA, while then President Megawati Soekarno Putri appealed for more affordable ARV prices.

In January 2004, the government formulated a national policy for ARV drugs, targeted at providing ARVs for 5,000 PLWHA in 2004 and 10,000 PLWHA in 2005. A subsidy of US$20 per month per patient was given to 4,000 PLWHA in 2004.

These efforts were not enough, however. The price of a triple ARV regimen (zidovudine, lamivudine and nevirapine) was still about US$564 per person per year.

Presidential decree on ARV manufacture

The ‘government use’ option is the most flexible and easiest to use in terms of providing greater access to ARVs in Indonesia.

Parallel import of the lowest-priced patented medicines is not possible because there is no specific provision for this in Indonesian law. Only the patent holder or its authorised agent could import a patented drug, which meant that they were free to determine prices, thus making the medicines expensive. Secondly, the number of PLWHA who need ARV drugs is high; thus a substantial amount of money would be needed to subsidise the cost. Finally, Indonesia has two state-owned pharmaceutical companies (Kimia Farma and Indofarma) with the ability to produce generic drugs and which can be empowered to assist PLWHA. Therefore producing the generic version of a patented drug at the national level can cut costs while assuring more supply of ARVs.

Moreover, the grounds for third-party compulsory licensing are narrow under Indonesia’s patent law, which does not maximise the TRIPS flexibility that allows a WTO member to determine the grounds for such a licence. Furthermore, the patent law requires a specific regulation to be promulgated. Although a draft had been discussed for some time, it remains a draft.

However, if the government believes that a patent is very important for the defence or security of the country or there is ‘an urgent need for the sake of public interest’, then ‘government use’ can be authorised through a presidential decree based on recommendations of the Ministry of Justice and related ministries or agencies. The decree will also decide on the reasonable amount of remuneration to be paid to the patent holder.

With increased pressure from health groups, the Ministry of Health began to consider producing generic ARVs at the national level as a more sustainable solution. Kimia Farma had by this time begun preparations for domestic production.

Some of the groups investigated the patent status of ARVs and found that, of the three included in the list of national essential drugs, i.e. AZT (zidovudine), NVP (nevirapine) and 3TC (lamivudine), only zidovudine is not patented in Indonesia. These groups also approached the most concerned health officials to forge a common understanding of the problems and possible solutions and identify which agency should begin the legal process.

Finally, the government decided to invoke the ‘government use’ provisions to produce generic ARVs and issued Government Regulation (PP) No. 27/2004 on the Procedure of Patent Implementation by the Government dated 5 October 2004.

Article 10 stipulates that the government will provide remuneration to the patent holder, but there is no provision on the criteria for calculating the amount thereof. The regulation also allows for legal action by the patent holder within three months after the presidential decree is issued. If there is no legal action or objection on the amount of remuneration, the patent holder is assumed to have no objections. However, if the patent holder files a legal action, the process will not stop the implementation of the ‘government use’ provisions.

The decree authorised the Ministry of Health to appoint a pharmaceutical company to exploit the patent on behalf of the government for the duration of the patent protection period and to provide remuneration of 0.5% of the net selling value of the ARVs to the patent holder. The two drugs are:

Nevirapine – patent owned by Boehringer Ingelheim, Patent ID 0001338 with an outstanding patent duration of seven years;

Lamivudine – patent owned by BioChem Pharma Inc, Patent ID 0002473 with outstanding patent duration of eight years.

Implementing ‘government use’

Kimia Farma, with its wide distribution network all over Indonesia, was authorised to produce the ARVs. The following generic ARVs (including combination dosages) were manufactured: Reviral (zidovudine); Neviral (nevirapine); Hiviral (lamivudine); Triviral (combination of lamivudine + zidovudine + nevirapine); Duviral (combination of lamivudine and zidovudine). The raw material for the generic ARVs is imported from India.

Based on an interview with a staff member at the Patent Directorate, the patent holders have not provided any comments on the release of the presidential decree. Initially, one of the patent-holding companies did send two lawyers from a reputable law firm to enquire about the decree. However, there was no follow-up action.

PLWHA who need the ARVs can now get them for free or partly subsidised from the recommended hospital. The price per package per month for the first-line fixed-dose combination (lamivudine, zidovudine and nevirapine) produced by Kimia Farma is US$38. The government provides a subsidy of US$20 per month, so PLWHA have to pay US$18 per month per package.

As a comparison, the price of lamivudine produced by GlaxoSmithKline is about US$290 per 60 tablets and nevirapine produced by Boehringer Ingelheim is US$96 per 60 tablets. Table 1 provides a summary of the relevant ARV prices compared with the prices of patented equivalents in 2000 as a baseline.

The prices of the patented drugs have fallen below the level in 2000, but they are still more expensive than the ARVs produced by Kimia Farma. According to Pokdisus, the price of patented ARVs has not decreased substantially even though the generic drugs are now in the market. Almost all the PLWHA treated under the Pokdisus programme have turned to generic drugs. Pokdisus currently provides free generic ARVs to about 2,000 persons, sourced from the domestic production under the ‘government use’ decree. But with only 25 government centres distributing the medicines and Kimia Farma operating at 15-20% capacity, more can be done to increase supply and distribution.

Remuneration at 0.5%

Kimia Farma has a written agreement for remuneration payment with the two patent-holding companies, i.e Boehringer Ingelheim and BioChem Pharma Inc. In April 2006, Kimia Farma paid Boehringer Ingelheim a sum of about US$3,700. The amount was paid after the patent-holding company in Indonesia sent an invoice. By accepting the remuneration payment, Boehringer Ingelheim is indirectly indicating that it agrees with the government policy of implementing the ‘government use’ flexibility for public health purposes.

BioChem Pharma, as the patent holder for 3TC (lamivudine), has not sent any invoice at the time of writing of this article.

The production of the generic ARVs makes it possible for more PLWHA in Indonesia to access the drugs. It was estimated that in 2006 about 5,000 from the total of some 10,000 PLWHA would have received ARV treatment. This is an improvement from 2003, when only 3.5% of PLWHA could get ARV treatment, 2004 (25% or 2,500 PLWHA) and 2005 (40% or 4,000 PLWHA).

Given the benefits of the ‘government use’ provisions for access to ARV drugs, the government together with health groups should pursue similar measures for other ARVs and essential drugs in Indonesia.

In conclusion, access to life-saving drugs can be facilitated if the national intellectual property law provides the necessary policy space, and there is political will followed up with action. However, a national consolidated effort is needed to achieve this, where health workers have to work with the government, NGOs, lawyers and national pharmaceutical companies.

Lutfiyah Hanim is a researcher with the Jakarta-based Institute for Global Justice. Hira Jhamtani is a Third World Network Associate based in Bali.

The full report is available in book form at http://www.twn.my/

Acknowledgments

The authors would like to thank the following resource persons for sharing valuable information for the full paper from which this article is drawn: Husein Habsyi, Deputy Director of Yayasan Pelita Ilmu; Soedibyo, Marketing Manager of PT Kimia Farma Tbk; Budi Djanu, of the Legal Section of BP POM (The National Movement for Improved Access to HIV/AIDS Treatment); Azmi Dahlan, the Patent Director of the Directorate-General for Intellectual Property, Ministry of Legal Affairs and Legislation and his staff; Pokdisus staff.

Endnote

1 The information about access to drugs for people living with HIV/AIDS is based on an interview with Husein Habsyi; Habsyi, H. (2006), ‘HIV/AIDS epidemics and ARV access in Indonesia’, paper presented at the Seminar Upaya Dukungan Pengobatan AIDS (ARV) di Wilayah Jawa Barat, Kerawang, 7 February 2004; and the website of Pokdisus AIDS FK UI, www.Pokdisus-aids.org.