Chapter 3: An East African...Chapter 3: An East African Community Health Commission

Chapter 5: East Africa's Essential... Chapter 5: East Africa's Essential Medicines' Distribution Chain

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Ruha Deveneson

[Editors' note:  As a member of Boston University School of Law's Legislative Policy and Drafting Clinic, Ruha Devanesan drafted the following research report to accompany the following proposed bill to establish a joint system for registering pharmaceuticals for distribution throughout the five  East African Community member states.]

SUMMARY

The lack of access to essential medicines remains worse in East Africa than in many other developing regions of the world.  Because of delays in treatment, diseases such as AIDS/HIV, Tuberculosis and Malaria run rampant in Kenya, Tanzania, Uganda, Rwanda and Burundi.  Other curable diseases such as respiratory diseases, diarrhea and malnutrition, also claim many lives.  Ineffective national pharmaceutical registration processes, i.e. the processes to license legally imported pharmaceuticals for marketing within a country, exacerbate the shortage of medicines for treating these diseases.  This report and bill address three aspects of problematic registration practices: undue delays in the registration of vital medicines by national drug regulatory authorities; the registration of more expensive patented drugs over cheaper generics; and the registration of low-quality drugs because of inadequate pre-registration quality testing and GMP requirements.¹⁴⁹ 

National drug regulatory authorities act the way they do mainly because of resource constraints, inadequate guidelines or training for effective registration, and corruption.  Local manufacturers lack the capacity to conduct thorough clinical trials (for the future production of medicines domestically) and fall below international GMP standards. Foreign manufacturers do not have an incentive to register cheaper generics in individual EAC member states because each country's market remains too small to provide an incentive to initiate local manufacture or even to sell innovator drugs at lower than world prices.

As a partial solution, this report proposes a joint registration system for the entire EAC region. By making the entire EAC regional market available under one registration requirement instead of five, joint registration will create a larger market, more likely to attract imports of cheaper generics as well as innovator drugs.   Creating a joint system will also pool the resources of the five EAC countries to avoid overlaps in registration processes and quality assurance.  Finally, a uniform registration system entailing higher standards of GMP and quality assurance will help to screen substandard medicines out of regional markets.

In Kenya, Tanzania, Uganda, Rwanda and Burundi (collectively the East African Community, or "EAC"), every day thousands of people die of preventable or at least treatable diseases, for example, AIDS/HIV, malaria and tuberculosis.  In Kenya alone, every day seven hundred people die from AIDS-related disease.  A shortage of essential anti-retroviral medicines (ARVs) contributes to these deaths.¹⁵⁰ In 2002, only 6,000 of an estimated 2 million Kenyans living with HIV received ARVs.  The rest either could not afford to purchase them at the high price of US$75 per month, or, because of supply shortages, could not buy them at local pharmacies.¹⁵¹  Similarly, in 2007, only 41 percent of Ugandans who needed ARVs received them.¹⁵²  The World Health Organization estimates that of the million deaths caused annually by malaria, if the drugs taken to combat the disease had proven genuine, patient access to those drugs would have saved 200,000 lives.
 
WHO estimates that up to 50 per cent of drugs sold in Asia and Africa appear fake.¹⁵³  While in most countries, the law forbids the sale of fake (or counterfeit) drugs illegal, legally produced and circulated substandard medicines continue to circulate.  Directly or indirectly, an adequate system of pharmaceutical registration could have prevented many, perhaps most of these deaths.      

A. Ineffective national registration systems contribute to the shortage of essential medicines in the EAC

This report addresses the problems of sub-standard registration practices by the EAC's national regulatory bodies leading to shortages in affordable, quality medicines in the five EAC countries.  As a solution to this problem, this Report recommends a bill to establish a joint registration system for all five EAC countries.   That will enable the drug regulatory authorities in each country to pool their current resources and staff to create a uniform regional registration system that prioritizes the provision of good quality, affordable medicines to East Africans within the Community. 

1. Importation and local production of unsafe or expensive medicines, and the shortage in essential medicines, remain part of the larger problem of ineffective Drug Regulation in the EAC

The broader picture into which this report on registration fits is that of a general lack of access to essential medicines in the East African Community.  Several factors contribute to this lack of access.  First, no individual EAC country has the capacity to produce essential effective medicines.  The EAC countries must therefore import most of them from abroad.   The member states, however, often lack financial capacity to pay for medicines to treat their entire populations for the range of sicknesses that plague: HIV, Malaria, and TB, three diseases which kill thousands of East Africans every year – and a devil's cauldron of others.  A 2004 report on Uganda demonstrated that perinatal and maternal conditions caused 20.4 percent of the total death burden, malaria caused 15.4 percent, acute lower respiratory tract infections 10.5 percent, AIDS 9.1 percent, and diarrhea 8.4 percent.  Other diseases mentioned included TB, malnutrition, intestinal worms and anemia.¹⁵⁴ According to the same report, "although the disease burden and mortality from preventable or curable illness is highest in Africa, pervasive poverty means that the continent's share of the global pharmaceutical market is only slightly more than 1 percent."¹⁵⁵ 

The five EAC countries' national DRAs do properly address diseases such as HIV, Malaria and TB.  In Kenya, for example, a 2005 random survey by the National Quality Control Laboratories (NQCL) and the Pharmacy and Poisons Board reported that almost 30 percent of the drugs in the Kenyan market proved counterfeit.   Some "were no more than just chalk or water marketed as legitimate pharmaceutical products."¹⁵⁶ The Kenyan Association of Pharmaceutical Industry estimates that counterfeit pharmaceutical products account for approximately $130 million annually in sales in the country.¹⁵⁷
Because of the delayed discovery of the ineffectiveness of imported first-line anti-malarial drugs', originally admitted by the Government regulatory authorities, the Kenyan Ministry of Health finally prohibited them.  Health policy and planning scholars observe the continued use of an outdated drug "may encourage parasite resistance and undermine the effectiveness" of the new drugs distributed to fight Malaria in Kenya.¹⁵⁸

By failing to filter out substandard medicines from domestic markets, as well as failing to provide a reliable legitimate channel through which consumers may obtain affordable quality medicines, ineffective systems of regulation, or no regulation at all, exacerbate the problem of access to quality medicines.  Thorough analysis of drug quality before licensing, vigilant checks at Ports of Entry ("PoE") for quality of drugs entering the country, and follow-up monitoring of the same drugs once they reach the market:  These functions that must take place to ensure that drug quality remains unadulterated.  Without thorough regulation, the other factors affecting access to essential medicines – increasing donor aid, importing innovator drugs¹⁵⁹ and generics,¹⁶⁰ locally producing essential medicines, and improving distribution systems for these drugs – cannot work effectively.
   
The prohibitively high prices of high-quality medicines contributes to the inadequate access to medicines in the EAC.  Populations consisting largely of persons living either on meager incomes or below the poverty line¹⁶¹ cannot afford high-priced medicines – no matter how good the quality.  Both patent laws and domestic taxes contribute to these high prices.  Most EAC consumers have very limited incomes and must pay out-of-pocket for their medicines (e.g. in Burundi). Because allopathic or traditional medicines cost less, those consumers have small choice but to turn to those alternatives. "The World Health Organization [WHO] has reported that between 60 and 70 percent of Africans approach traditional healers as their first line of healthcare" and "people are starting with traditional healers and then moving back and forth" between treatments. ¹⁶² In Kenya, the figures for rural consumption of traditional medicines soar higher, with dire consequences: "an estimated 70% to 80% of Kenyans, mostly rural, predominantly depend on traditional rather than formal medicine for their primary health care and have little or no access to secondary or tertiary care."¹⁶³ In recognition of these problems, the five EAC countries, at their (DATE?) EAC Ministerial Conference, laid out several objectives on healthcare in general and on registration in particular.¹⁶⁴

Before it can improve access to quality medicines, the EAC must address many aspects of regulation.  This report addresses the narrow issue of how registration policies and processes contribute to the entry into, and use of, low-quality drugs in the pharmaceutical markets of the five EAC countries.   It proposes a narrow solution to this problem.  Other research reports submitted by ICLAD to the EAC on improving access to medicines address other essential aspects of reform – improving procurement processes, coordinating efforts to deal with donor aid agencies and pharmaceutical companies better, and streamlining distribution processes within the national health systems.
   
By focusing on registration, this report addresses quality assurance of medicines before they enter the EAC market (see diagram below), as well as these countries' licensing processes.  Effective registration reform requires thorough quality control procedures, and systematic post-marketing testing to ensure that, further down the pipeline of procurement and registration, dealers or others do not adulterate or tamper with medicines.  These processes entail different enforcement mechanisms, and therefore other bills must address these aspects of procurement and distribution.

Continual entry of low-quality drugs into these countries, due to ineffective registration practices, exacerbates the broad harm.  First, low-quality drugs cannot properly treat these diseases and might even produce adverse drug reactions in patients.  Second, treatment of these diseases with low-quality drugs could interfere with the effects of quality drugs, administered later.   Third, effective registered drugs sometimes prove too expensive, in part because registration authorities do not prioritize attracting generic manufacturers.  Fourth, sometimes, bureaucratic behaviors or corruption may drag out the essential registration process for months or even years past the average registration period, endangering the medicines' potential effectiveness.

2. The Problem-Solving Approach

This report follows the four steps of institutionalist legislative theory's problem-solving methodology.¹⁶⁵  As a first step, this paper describes the social problem that the bill aims to help resolve (in this paper, that of ineffective registration by national regulatory authorities in the East African Community) In its Section II, this Report identifies the different actors, or role occupants that contribute to that problem, and describes their behaviors that constitute the social problem at issue.  Section III explains the problematic behaviors identified in Section II.  It examines the governing law and the range of objective and subjective causes of those behaviors.  Section IV then proposes a solution aimed at altering or eliminating the causes of those behaviors as identified in Section III.  It puts forward several alternative registration methods and structures to those currently in use.  In part via a cost/benefit analysis, Section IV justifies the Report's preferred solution, a solution that effectively changes the identified problematic behaviors and fosters effective registration practice. 

This Step I of the problem-solving methodology describes the specific social problems created by the existing ineffective drug registration systems.   This step focuses attention on the problems the 'solution' (the final bill) must address and the problematic behaviors the bill must seek to transform. 

Substandard medicines frequently cause serious harm to consumers, and increase resistance of diseases to otherwise effective medicines.  In Tanzania, for example, 11 percent of medicine samples collected from public facilities, and 13 percent of those from private pharmacies failed quality testing. 

Poor-quality drugs, including counterfeits, are thought to be widely available, especially in the private sector. In the first five months of 2001, 30 percent of the samples tested by the National Quality Control Laboratory failed, with a quarter of those being counterfeit drugs. It is estimated that half of the drugs on the market are unknown to the local drug authority.¹⁶⁶

In four ways, the failure of drug regulation contributes to the severe medical issues in the EAC.  First, adverse drug reactions (ADRs), caused by the administration of inappropriate medicines, cause several thousands of deaths per year.  They constitute the 4th to 6th largest cause of morbidity in the United States.  In Least Developed Countries such those in the EAC, ADRs likely cause even more deaths, but adverse drug reactions in the EAC remains extremely under-reported.¹⁶⁷  A Burundian Guideline asserted that, "[t]his problem may be aggravated by a lack, in Burundi, of legislation, quality control and proper drug regulations, including ADR reporting," combined with "a large number of substandard and counterfeit products circulating in our markets, a lack of independent information and the irrational use of drugs."¹⁶⁸

Resistance constitutes the second major problem associated with substandard medicines in the EAC.  Resistance of plasmodium falciparum (the Malaria parasite) to chloroquine, the cheapest and most available drug to fight malaria, has spread throughout endemic areas, including East Africa.¹⁶⁹  Administration of the wrong quantities of a medicine can breed resistant parasites, and therefore sub-normal or supra-normal quantities of an active ingredient can foster resistance to otherwise effective medicines.¹⁷⁰  In Uganda in 2001, one study found 39 percent of chloroquine tablets surveyed of inferior quality, 11 percent of tablets having sub-normal quantities of the active ingredient and 28 percent having supra-normal quantities of the active ingredient.  Similarly, of the chloroquine injections tested, 51 percent of samples failed the quality test, containing either too much or too little of the active ingredient.  Even these figures appear as an improvement on the 55 percent of tablets and 62 percent of injections reported in a 1998 as sub-quality.  (The study attributes this slight improvement to the establishment of Uganda's National Drug Quality Control Laboratory (NDQCL), which carries out randomized quality-control tests on all registered drugs within the country.)  Nevertheless, the study concludes that these figures remain "unacceptably high."¹⁷¹

Third, the price of medicines significantly limits East Africans' access to essential medicines.¹⁷²  At an East African "Improving Access" conference in 2000, a pharmacist, Kirsten Myhr, presented information on the retail prices of 15 essential medicines in Kenya, Tanzania and Uganda, as compared with prices in Norway.  The antibiotic ciprofloxacin cost twice as much in Uganda as Norway, and the anti-malarial mefloquine was also twice as expensive in Tanzania as in Norway.  Although mefloquine has a limited market in Norway, in Tanzania, , given its malaria epidemic, that market stretches widely.  Myhr concluded, "the entire region is suffering from reverse equity... the poor are paying more than the rich."¹⁷³  This difference in price increases exponentially when considering the differences in income in the two countries and the differences in out-of-pocket payments in each country.  In most Western countries, insurance and government assistance minimize out-of-pocket expenses. In developing countries, patients pay for 80 percent of drugs out of pocket. "(T)he average Tanzanian would have to work 215 days to purchase a basket of 13 essential medicines, while a Canadian would only have to work 8."¹⁷⁴ 

The same report pointed out the difference in prices persists not only between rich and poor countries, but between countries with and without patents on particular medicines.  In Thailand, for example, patients enjoy ready availability of several generic versions of the AIDS-related meningitis treatment, fluconazole.  Competition between them has driven the price of the drug down to US$0.30 per 200mg capsule.  In Kenya, the same drug costs US$18.00, because fluconazole enjoys patent protection.¹⁷⁵  In other words, patent protection renders the drug sixty times more expensive in Kenya than Thailand.

Current East African registration practice perpetuates a fourth harm: The delayed registration of certain essential medicines.  In 2002, of 87 ARVs awaiting registration by Kenya's regulatory authority, the Pharmacy and Poisons' Board (PPB), that Board had registered only three.¹⁷⁶  The rest have been waiting far longer than the estimated 3-month average approval period, and some have even awaited approval since as long ago as 1999.¹⁷⁷ 

Such delays in registration contribute to general shortages of essential medicines in East Africa.  In 2002 in Rwanda, for example, 37 percent of hospitals reported 'stock-outs' of essential medicines.  This number included 50 percent of the district pharmacies, 35 percent of district hospitals, and 38 percent of health centers experiencing drug shortages.¹⁷⁸  In Uganda, the figures appear significantly better.  Even there the median percentages of key medicines available there remained only 75 percent in public health facilities and 55% in district warehouses.  The median stock-out duration in Uganda averaged about 3 months in public health facilities, and 6 months in district warehouses.  These durations seem "unacceptably" long.¹⁷⁹  The Tanzanian situation appears only slightly better, with 65-70 percent of key drugs available through the government procurement department, the Medical Stores Department (MSD).   When the MSD cannot supply medicines, however, buyers turn to local private wholesalers and distributors, who "often sell products at less favorable prices and of dubious quality."¹⁸⁰

In Kenya, in public health facilities and regional warehouses, a basket of essential medicines had a median stock-out of about one month.  Of these, half the public health facilities had stock-out durations that lasted longer than a month, and 13 percent greater than 3 months.  In addition, 20 percent of regional facilities experienced stock-outs of essential medicines for more than 3 months.¹⁸¹ In early March 2004, most public and private hospitals ran out of Efavirenz (brand name Stocrin), a medicine produced by Merck and used in ARV treatment. This approved disastrous for HIV/AIDS patients who must follow treatment constantly: "Shortages, which in turn affect adherence to treatment, can lead to serious potential consequences ranging from development of resistance to first line treatments to, ultimately, death of HIV/AIDS patients."¹⁸²

A.  Note on social costs and benefit

The current system of registration benefits patent-holding manufacturers of medicines in several ways, while the consumers of these medicines pay not only with an unfairly large amount their meager earnings¹⁸³ but worse, with their health and their lives.  An unfocussed registration system, operating without guidance from a public health-focused national policy, allows non-essential medicines to enter the market, while excluding essential ones.  Manufacturers benefit from a weak registration system because they may avoid proving the quality of their medicines and their manufacturing processes.   Counterfeiters also may take advantage of a weak registration system (coupled with a weak regulatory system)    Operating in a semi-open fashion, they may adulterate genuine pharmaceuticals or manufacture their own fake versions, either within the country or abroad, and then distribute them with near impunity.¹⁸⁴ On the other hand, when the registration and regulatory system remain weak, patients become the losers.  They either have no access to medicines because of shortages, or, because of their expense, they cannot buy available medicines.  Instead, these patients too often have no alternative but to turn to substandard medicines.  The governments of the EAC countries, which often buy medicines from innovator or generic producers at great cost to their limited national resources, only to discover that – improperly tested before registration – they prove ineffective.

In sum, the East African countries' currently inadequate registration systems lead to the importation of substandard or over-priced medicines, and delays in the registration of essential qualified medicines – all serious obstacles to EAC access to essential, effective medicines.  Whose and what behaviors produce these lamentable outcomes?

A.   Introduction

This section identifies as role occupants the officials who administer the drug regulatory systems of each of the five EAC countries, and the pharmaceutical manufacturers who seek to obtain licenses to sell their pharmaceuticals in those countries' markets.  This Report explores these actors' problematic behaviors – behaviors that the proposed bill aims to change.   In Part III, the Report analyzes and provides evidence as to the causes of each set of problematic behavior.  In Part IV, it suggests logically possible legislative solutions (the detailed provisions of a bill) likely to change those behaviors. 

1. The Drug Regulatory Authorities (DRA's)

Although the five EAC countries' drug registration systems in some respects vary in competency, in many other respects they remain similar.   Common threads of problematic behaviors characterize the five EAC five drug regulatory authorities.  Before they enter national markets, they subject pharmaceuticals (1) to poor quality testing, (2) if at all, to loose GMP testing, and (3) to registration procedures uncoordinated with national drug policies.  Finally, (4) they neither prioritize nor fast-track for regulatory approval cheaper generic versions of essential drugs.

As the regulator of Kenya's Pharmacy market, the Pharmacy and Poisons Board (PPB) has a demanding mandate – to police the largest pharmaceutical production market in the Common Market for Eastern and Southern Africa (COMESA) region. The PPB's drug registration and quality assurance processes remain slow (they take an average of 6 months to register a drug) and inflexible (given a sudden outbreak of a disease, for example, the PPB fails to speed up the registration process to increase the supply of drugs to fight it) ¹⁸⁵

The functions of Kenya's National Quality Control Laboratory appear limited.  Of the samples collected in 2003 for regulatory purposes, it tested less than 20 percent (see Table 3).¹⁸⁶

A disconnect between national treatment policies and the PPB's registration processes has had disastrous consequences for disease treatment.  In the 1990s, for example, the PPB registered sulfamethoxypyridazine products for human use in treating malaria, even though the national antimalarial policy declared this drug unsuitable for human use, and restricted to veterinary use only.¹⁸⁸ As late as 1998, one could find in the Kenyan market at least seven products containing this ingredient.¹⁸⁹

The PPB supposedly inspects and licenses pharmaceutical manufacturers and retail outlets.  Because the law does not provide the PPB with guidelines for inspection, however, the Board has fallen behind on enforcing compliance with the national medicines legislation.  Despite Pharmacy and Poisons Act requirements, the PPB apparently failed properly to inspect pharmaceutical plants for good manufacturing practices.¹⁹⁰

As one of PPB's major problems, it takes an inordinate time to register medicines.¹⁹¹  Formally, PPB sets no time limit on applications.  For a five-year license, it charges a fee of $1,000 per product.¹⁹²   For a foreign importer, the process usually takes around 6-9 months, but in some cases may take several years.  These delays discourage patent-holding manufactures from applying for licenses. They also diminish the utility of TRIPS flexibilities such as compulsory licenses and the Bolar exception.  (The Bolar exception allows generics manufacturers to register and prepare to market a drugs before the patent expires, so that once the patent expires, they can market their versions immediately.  A slow registration process renders that exception redundant because, even after the patent expires, a generic's sales may still have to wait for completion of its registration.¹⁹³)

Of the five EAC countries' DRAs, Tanzania's Food and Drug Authority ('TFDA') appears the most operational and efficient.  Created in 2003 as an executive agency under the Tanzanian Ministry of Health, TFDA replaced the Pharmacy Board, also formerly operated under the Ministry of Health.  TFDA has responsibility for controlling quality and safety in food, drugs, cosmetics and medical devices.  It has created very comprehensive guidelines for manufacturers on the registration of medicines, both patented and generic, and even has a separate set of guidelines for the registration of traditional medicines.  (In contrast, the Kenyan PPB, for example, has no mandate to regulate or register these.)  

Information on possible problems encountered in the TFDA's registration practices remains limited.   Available evidence, however, suggests that it has tackled several problems experienced by the earlier Tanzanian Pharmacy Board.  One of the first countries to adopt an essential drugs list, TFDA prioritizes the procurement and delivery of essential medicines.  Until 1999, when new management took over the Pharmacy Board, the Pharmaceutical and Poisons Act requirement to register all pharmaceuticals suffered weak enforcement.  That year, the new Pharmacy Board instituted a registration unit staffed by seven pharmacists with extensive experience in pharmacy but little experience in registration issues.   By 2001, TFDA had registered some 60 percent of the drugs on the National Essential Drugs List (NEDLIT)    Although in that year, out of 4,800 products submitted for registration, the TFDA had registered only 1,408 human drugs and 64 veterinary drugs (i.e., a third of those submitted),  by 2000 it had registered 123 percent more human drugs than in 1999.¹⁹⁴

The TFDA still, apparently, currently applies national GMP standards that remain below international standards.¹⁹⁵  As a result, it remains uncertain whether any of the pharmaceutical manufacturers within Tanzania maintain manufacturing practices that ensure that the quality of medicines they produce conform with international standards.  Requiring lower GMP standards of manufacturers may set attainable goals for small pharmaceutical producers.  Donor agencies and other purchasers in other EAC member states, however, tend to require different (and in most cases, higher) GMP standards.  The lower GMP standards set by Tanzania limits Tanzania manufacturers to selling only in the Tanzanian market.  Similarly, the TDFA does not do Quality Assurance testing of local Tanzania-produced medicines.  Instead, the companies themselves conduct that testing.¹⁹⁶  While this reduces TFDA's regulatory burden, it also means that TFDA does not play the essential role as a watchdog over the manufacturers' practices.

Uganda's National Drugs Authority ('UNDA') also seems well-established, with a clearly defined process for registering manufacturers' drugs.  Before registering the product, and to maintain its license, every three years after that, the NDA must inspect a site that manufactures a final pharmaceutical product.¹⁹⁷  

The Ugandan Ministry of Health's ARV Taskforce Logistics Subcommittee estimates that the drug registration process takes between 3-6 months.  Delays in documentation and communication may increase the average registration time to 6 months for generics and to a year for new medicines.  As part of the national health policy, however, the NDA prioritizes and fast-tracks ARVs.  As a result, registration of ARVs in Uganda takes an average of only 1-3 months, although each new strength of a drug requires a separate license.¹⁹⁸

According to the Logistics Subcommittee, every time it receives a new drug application, Ugandan law requires UNDA to inspect the manufacturing factory for GMP for each different product category.  For example, unless the manufacturer already has registered one or more ARVs for the Ugandan market, "if a generic manufacturer in India has antibiotics registered for the Ugandan market, but has applied to register an ARV, NDA must re-inspect that manufacturing site for the category of ARVs."¹⁹⁹ 

The UNDA's thorough testing mandate strains the Ugandan quality control labs (the NDQCL)   Their seven staff members operate the laboratories' three quality-testing machines seven days a week.  The Logistics Subcommittee warns that without a fourth machine, increases in imports will further strain the system.  Quality testing then may become a bottleneck in the supply chain.²⁰⁰

The UNDA provides free tests for the first three batches of a drug that enters Uganda. To avoid the payment of testing fees, many importers therefore limit their shipments to three batches.  Because some firms interrupt shipments when they must pay registration fees, this contributes to Uganda's shortage of essential medicines.²⁰¹

In Rwanda, the Law on Pharmaceutical Art mandates the establishment of a national commission responsible for drug registration (Article 42) pursuant to a Presidential Order (Article 43) and requires manufacturers to comply with WHO GMP standards (Article 36).   As of 2006, however, the Presidential Order specifying the details necessary to establish the drug registration authority apparently still awaited for Cabinet approval.²⁰² Given the lack of a national registration authority with the equipment, labs and qualified technicians to conduct the necessary quality tests, the Rwandan Ministry of Health allowed into the country only medicines registered elsewhere (e.g., US Federal Drug Administration-approved) or that had WHO certifications.²⁰³  This system, also called reliance registration, or vicarious registration, ²⁰⁴ ensures that the quality of medicines approved by the Ministry of Health, but inevitably limited the Rwandans' access only to medicines that meet the FDA's very high standards – mainly expensive patented medicines from the West – or those prequalified by WHO.²⁰⁵ The WHO pre-qualification system, while effective, only covers medicines treating HIV/AIDS, malaria, tuberculosis reproductive health.  As a result, Rwandans suffering from other diseases, such as respiratory diseases, and diarrhoeal diseases, seemed less likely to have access to affordable treatments.

A decade of civil war left the government of Burundi struggling to rebuild its infrastructure.  In 2004, the health system, like other social services, only barely functioned.²⁰⁶ In 2002, the government introduced a cost-recovery policy, which required patients to pay 100 percent of all medical expenses related to their treatment, and 115 percent for medicines (i.e., patients pay 15 percent more than the medicine's cost the government).   Theoretically, this covered local additional healthcare expenses, including payments for those patients who could not afford to pay.  In practice, however, although they could not afford to pay, the government did not register most Burundians as destitute.  Not certifiably destitute, they had to cover the costs of their treatment.²⁰⁷  In 2004, 81.5 percent of patients consulted said they had to go into debt or sell portions of their harvest, livestock or land to pay for treatment.²⁰⁸  When they cannot pay, health centers in Burundi may confiscate patients' identity papers or belongings.  According to MSF, until someone pays the fees (including the price of medicines), some health centers detain patients -- without giving them care.  In such cases, NGOs and other civil organizations have tried to reimburse the health centers for these debts and thereby obtain the patients' release. ²⁰⁹  The health care situation in Burundi remains dire.  In those circumstances, government authorities appear not to view registration of medicines as a high priority. Burundi therefore does not currently have a drug registration authority.  According to one report published in 2007, the Ministry of Public Health has just started delivering ARV therapy in hospitals and NGOs deliver medicines through HIV/AIDS centers,²¹⁰ but it is unclear whether the Burundian government carries out registration in a manner like that of Rwanda's Ministry of Health, or whether medicines are imported without regard to licensing.

Adequate registration of medicines requires that their quality be ensured before procurement.  Apparently, however, none of the EAC member states' national drug quality control laboratories operates under the optimal conditions necessary to monitor the quality of drugs registered in their national markets.  None of the EAC's national DRAs requires manufacturers to meet international GMP standards.  This suggests the danger that registered (and therefore presumably regulated) medicines may prove only slightly safer and more effective than un-registered medicines. In addition, the national registry authorities apparently do not adequately coordinate drug registration with national procurement policies and essential drugs lists – coordination required to ensure prioritization of most needed medicines in entering the country.   Some DRAs' bureaucratic decision-making, for example,  apparently has required applications for registration of generic medicines to wait in line until after the registration of more expensive patented versions of the same drugs.  This has tended to discourage generics manufacturers from seeking to enter their national markets.

The manufacturers of pharmaceuticals registered in EAC countries vary greatly in size, type, quality of production and country of origin. With respect to the social problems posed by high drug prices, lower quality of drugs, and time delays, this report specifies three groups of manufacturers and their relevant behaviors. (1) Large international pharmaceutical companies, like Merck and Pfizer (often called 'Big Pharma'), export patented drugs for sale in East African countries at higher prices.  There. Big Pharma may invest in last stage assembly and packaging processes.  (2) Foreign generics producers, based in countries like India and Brazil, export their lower-priced medicines for sale.  These, too, may invest in last stage manufacturing in EAC country markets.   (3) At least initially, domestically owned EAC-country-based manufacturers may partner with foreign manufacturers to produce generic versions of lower cost medicines.  They sometimes conduct the final stages of assembling and packaging active ingredients for in-country sale, and if possible, in EAC-wide markets. This section of this Report analyzes the extent to which different factors reflecting their specific circumstances influence the behaviors of these firms' decision-makers.

Manufacturers of patented medicines in developed countries such as the United States (e.g. Pfizer, Merck, Johnson & Johnson and Novartis), Switzerland (Roche) UK (GlaxoSmithKline) and France (Aventis),²¹¹ supply countries such as the EAC's members with great quantities of essential medicines.  By patenting their medicines' formulae, these companies – 'Big Pharma' – gain exclusive rights to manufacture and sell them in markets.  Absent competition, they can – and do – set prices so high that few citizens in these countries can afford them.  In practice, these companies sell their medicines directly only to private distributors accessed by the narrow wealthy elites.   Some make special arrangements to sell to international donor agencies and non-government organizations, sometimes at lower prices.   In various ways, they earn sufficient profits to make it worthwhile to register their drugs in the EAC member countries.²¹²

Professor Kevin Outterson, an expert on intellectual property rights and patented pharmaceuticals, points out that, during the period of exclusivity that patents and other restrictive marketing arrangements grant these manufacturers, those pharmaceuticals "may be priced at more than 30 times the marginal cost of production."²¹³  For example, GlaxoSmithKline produces a three-drug combination ARV treatment called Trizivir, which costs $1,602  (for what unit?  A year?)  in Africa.  One of India's largest generics producers, Cipla, however, sells its generic version Triomune in Malawi for just $304 a year.²¹⁴  In countries where Glaxo's Trizivir's patent is protected, however, Cipla would not be able to sell Triomune, and the citizens of those countries would be deprived of an equivalent treatment at under one-fifth the price.

Big Pharma uses another mechanism to maintain their monopoly over the supply of essential medicines: data-exclusivity periods during the registration process.   For five years, when registering their own products with a country, the data-exclusivity period bars a generic producer from relying on data submitted by the original drug's manufacturer.  That bar holds even if the generics manufacturer can prove its generic version chemically and biologically identical to the original drug.²¹⁵  For those sometimes crucial five years, data exclusivity therefore functions like a patent.  It effectively prevents the marketing of cheaper 'copies' of specified drugs in a certain market – even when the patent for that drug has expired.  An essential medicines advocate writes:

Big Pharma aggravate the difficulties that thwart most low-income East Africans from accessing essential medicines by insisting on patent protection and, at the registration stage, on data exclusivity.  Thus does Big Pharma strengthen their monopoly of the medicines markets, making possible high and largely unaffordable prices.

b.    Foreign Exporters of Generic Drugs

Exports of generic drugs from foreign countries such as India, Brazil and Thailand, have drastically reduced the prices of essential drugs, increasing thousands of East Africans access to life-saving medicines.²¹⁷

Generic exporters do, however, face severe barriers, some of which (patents and data exclusivity periods) this Part earlier discussed.  In addition to patent laws in receiving countries, pressures related to TRIPS and from Big Pharma have forced exporting countries to impose patent laws within their borders.  Frequently that has effectively prevented the local manufacture of generics.²¹⁸

As another problem, some countries – like Rwanda and Burundi – rely on external monitoring by WHO,²¹⁹ or an internationally respected DRA like the US Food and Drug Administration (FDA)   If neither has approved a generic producer's drugs, that producer may not export them to those countries. 
Counterfeit production of medicines in generic producers' home countries also may bar their registration in the EAC countries.  India's generics industry confronts this problem in a particularly stark way.  The managing director of an Indian generics producer, explains:
 

According to the article quoting Thacker, the WHO estimates that 10 percent of the global pharmaceutical market, or $21 billion, consists of counterfeit drugs, and 35 percent of this counterfeit production originates in India.  This, according to the article, results in "loss of brand equity, loss of reputation, and mistrust of customers, health officials and regulatory authorities."²²¹

Foreign generics exporters could do a great deal to bring down prices in the EAC and thereby increase access to essential medicines in a big way.  The resistance they face from patent-holding manufacturers, and the lack of regulatory control within their own markets, however, apparently has sometimes either compromised their medicines' quality, or created doubts in EAC importing countries.  That they too may have to comply with TRIPS patent laws has also restricted the ability of foreign generics manufacturers to produce new generics based on patented drugs, therefore further restricting their contribution to EAC's supply of essential medicines.

c.    Local Producers in the EAC

The main obstacle posed by local producers to EAC inhabitants' access to affordable, efficient medicines lies in their dependence on assembling ingredients produced and imported from elsewhere.  They do little research as the essential basis for creating new chemical entities or generics for domestic use.   Even the pharmaceuticals they do produce remain little more than a fraction of the drugs their communities need, requiring the import of medicines to satisfy the bulk of the demand.

In 2005, Kenya reportedly had the largest pharmaceutical production capacity in the Common Market for Eastern and Southern Africa (COMESA) region, with 34 of the region's 50 recognized manufacturers.²²² Some companies comprised subsidiaries of multinational pharmaceutical companies, performing the final stages of production like drug repackaging or constituting raw materials into dosage form.²²³  Others produced generic pharmaceuticals – an industry that, if allowed to grow, could drastically reduce the regional cost of medicines.  In general, however, the local produced generic manufacturers do not conduct clinical trials on their drugs; they argue that they do not manufacture new medicines, but merely copy known ones.  The companies do supposedly conduct bioavailability and stability trials in-house, but since the Kenyan Pharmacy and Poisons Board does not regulate or authenticate in-house trials, it is difficult to determine the extent to which they follow industry quality standards,²²⁴ To bring these manufacturers up to international GMP standards and quality production, not only generics but possibly new drugs, proves a demanding task.   Not required by the Kenyan government to meet international quality standards, many fall behind.
As another problem, Kenya still imports most essential medicines its inhabitants use.   Local manufacturers cannot step up to cover shortages, forcing patients to go without until more international supplies arrive.  This heavy reliance on imported medicines, especially patented medicines, proves troublesome, especially since large pharmaceutical manufacturers may withhold supplies unless Kenyan importers meet their patents or price demands.²²⁵

Kenyan manufacturers also conduct very limited research and development.  What R&D they do is restricted to innovation in manufacturing processes of current medicines, rather than in innovating new pharmaceutical products. ²²⁶
Uganda imports over 90 percent of its pharmaceuticals, producing only 10 percent locally.²²⁷ In 1999, the Ugandan government imported medicines valued at $73,776,000, more than ten times the value of domestic production, $7,440,632.²²⁸  Only five local firms produced pharmaceuticals on a large scale, while five remained small-scale manufacturers.²²⁹  Again, reliance on foreign exports may lead to shortages which the local Ugandan pharmaceutical industry could not produce enough to cover.  Ugandan President Yoweri Museveni announced the opening of an ARV and (?) anti-malaria factory in Uganda in early 2008, but it remained unclear whether the factory would take off (see Explanations section).²³⁰Media reports of  20 February 2009 reflected that the first batch of ARVs was produced.

The Tanzanian pharmaceutical manufacturing sector remained small; in 2007, only eight companies share the domestic market, mostly producing penicillin, injectibles and infusions.  Only one currently produced ARVs (Tanzania Pharmaceutical Industries, or TPI), while another, Shelys, might follow suit.²³¹  Local producers enjoy preferential treatment by the Tanzanian government, receiving a 15 percent preference for their tenders (?), and they did not use donor money purchase inputs (?) Because they abide by Tanzanian, not international GMP standards local producers do not have access to the donor market (i.e. the medicine purchased by NGOs and foreign countries as aid).²³² Tanzanian manufacturers generally do not produce essential medicines, and have largely kept to producing less vital medical supplies such as penicillin.

The situation in Rwanda appears similar.  After the 1994 genocide, the Rwandan government created a new national health policy, which prioritized resolution of the following five problems:

1. the shortage of drugs,
2. the inadequate distribution,
3. the high costs,
4. the problem of quality and
5. the scarcity of appropriate (?) regulations.

To meet shortages and high drug costs, the government established LABOPHAR (Rwanda Pharmaceutical Laboratory) to manufacture essential drugs locally as one of its functions.  LABOPHAR does not, however, produce ARVs or other essential medicines, but supplies 100 percent of the local market for sterile solutions for perfusion.²³³  Reliance on foreign imports, accompanied by increased costs and risks of delays, therefore affect Rwanda as well.  Burundi, as far as is known, does not possess pharmaceutical manufacturing capacity.

Manufacturers do play a part in the delays in registration process to the extent that they either have not conducted the right trials, or have not submitted complete information on their trials in time.  Bibiana Njue, Head of Drug Registration at Kenya's Pharmacy and Poisons Board, for example, told one news source that while the average registration time in Kenya is about 3 months, "The companies do not respond to our queries on time. There is no way that we can register them without all of the information required."²³⁴

In short, manufacturers, depending on whether they constitute foreign or local, or patent-holders or generic producers, may contribute in several ways to EAC member states' lack of access to essential medicines.  Foreign patent-holding manufacturers use patents and data exclusivity to block cheaper generics from entering the market, and charge high prices for their drugs in developing countries.  Foreign generics manufacturers meet resistance in marketing their generics in the EAC because of patent laws and data exclusivity rules, and meet resistance in their home countries because of domestic patent laws. Local manufacturers stick almost exclusively to generics manufacturing or to assembly of foreign-patented drugs and do not meet international GMP standards required to export to neighboring markets or to sell to donor organizations within their countries. 

A.    Introduction

Given the problematic behaviors of the DRAs and manufacturers described above, the next step in the problem-solving logic requires asking, why do these actors behave as they do.  To answer that question, this report uses institutionalist legislative theory's seven categories of possible explanations of problematic behaviors in the face of a rule: the rules themselves; the opportunities the actors have to continue engaging in their current behavior; each actor's capacity to behave more appropriately; the extent to which the relevant authorities have communicated the rules to actors; the actors' interests in continuing their current problematic behaviors; the implementing agencies' (here, the DRAs') decision-making processes hinder their effectiveness; and finally, the actors' ideology that might contribute to their current behaviors.  This part provides explanatory hypotheses as to the probable causes of the relevant sets of actors' problematic behaviors, and the evidence to demonstrate that those hypotheses prove consistent with the available facts.   That lays a basis for problem-solving's third step: The design of the detailed provisions of a legislative solution, grounded on facts,  which logically seems likely to alter or eliminate the causes of existing problematic behaviors, and induce new ones more likely to ensure effective registration of affordable essential medicines for all East Africans.

Drug Regulatory Authorities – Why do the National Drug Regulatory Authorities fail to fulfill their missions of filtering out substandard medicines and providing quality medicines to their populations in a prompt manner?

National Drug Regulatory Authorities in the EAC, like manufacturers, run the gamut in terms of size, availability of resources, and the markets they must regulate.  This Part discusses the causes of these authorities' problematic behaviors collectively because the available evidence suggests that significantly similar country (and regional) circumstances shape their registration behaviors.
The pharmaceutical registration laws in each of the five EAC countries (except possibly Burundi) on their face appear comprehensive, yet in none of these countries, do registration practices rise to the levels the laws seem to require.   Current laws therefore overreach, given current resources (this is especially the case in Rwanda) or do not address key issues in the registration situation (e.g., Kenya's laws do not call for fast-tracking in registration to meet the needs for essential medicines during outbreaks).    In other words, the rules do not ensure effective implementation.

Kenya's Pharmacy and Poisons Act (established in 1957 and most recently amended in 2002), for example, establishes the Pharmacy and Poisons Board (the PPB) and mandates it to oversee the drug registration process and licensing of pharmaceutical manufacturers within Kenya.   On the one hand, however, the law requires GMP inspection, but does not provide details necessary to ensure implementation.   On the other hand, Rule (1) of the Pharmacy and Poisons (Registration of Drugs) Rules makes it mandatory for the PPB to conduct an investigation into the pharmaceutical, pharmacological and other aspects of a drug, including local re-conduct of clinical trials.²³⁵ This rule's seeming inflexibility makes it difficult for the PPB to fast-track essential medicines such as ARVs even where might want, for example, during the informal declaration of HIV/AIDS as a national disaster.   Because the rule appears so inflexible that it becomes impractical to follow it, the Board apparently ignores it.  A DFID report on Kenya's willingness to use TRIPS flexibilities points out: "The rules prescribed with regard to drug registration are so inflexible that in emergency health situations in Kenya, essential medicines available abroad may not quickly be used [and] [b]esides, it is not known when these rules were last put into practice." (footnote??)

In Rwanda's case, two laws supposedly govern the pharmaceutical sector: "L'Art de Guérir," gazetted in 1998 to establish a legal framework for medical, dental, and pharmaceutical care; and "L'Art Pharmaceutique," which came into force in 1999 and governs the pharmaceutical sector in particular. ²³⁶  No formal procedures exist for a periodic review of the Essential Drugs List (EDL), created in 1997 and updated in 2002; and it remains unclear whether and how the relevant authorities use it in implementing national procurement policies.²³⁷ Apparently, these laws remain unimplemented, because no ministerial instructions provide detailed procedures for creating rules and regulations particular to Rwanda's pharmaceutical context.  L'Art Pharmaceutique calls for the creation of a National Committee for Drug Registration, but does not provide for its establishment, leaving Rwanda apparent without any drug registration body (footnote??)   A USAID report sums the situation up by saying:
 

Each of the five EAC countries, in short, have laws mandating effective registration of medicines, but few have promulgated thorough, yet flexible, rules and regulations to help the DRAs implement those laws.

The decision-making process by which DRA officials register medicines may explain why in some instances they delay registration, or why they do not prioritize cheaper drugs of equivalent quality over more expensive ones in registration.   In Kenya, for example, "bureaucratic delays" hold up registration of drugs for up to a year and a half, even though the PPB claims registration takes an average of 3 months. (footnote??)  According to Christa Cepuch, a pharmacist with Medecins Sans Frontieres, because Kenya's PPB officials did not consider the nation's updated drugs policy before registering drugs, they registered drugs no longer considered safe as treatments for malaria.   Kenya has an Essential Drugs List that sets the criteria for drug selection as quality, safety, efficacy and cost.   The PPB last updated the National Medicine Policy document over a decade ago, however, and does not address traditional medicines at all.  Nor, because the Policy remains outdated, has it adequately fast tracked registration of medicines necessary to address current public health priorities, like the HIV/AIDS and malaria epidemics.²³⁹  

This again is a problem with the process of registration in that country, because while Instead of coordinating the registration process with the latest national drug policies and essential drugs lists, the relevant officials seem to make their decisions side by side with little consideration of their decisions' potential interrelated implications. 

As another problematic feature, involving several agencies in regulating drugs may lead to overlapping of their activities and duties, creating a situation where no one body implements policy, because each expects the other to do the job.  For that reason, Tanzania's Ministry of Health decided to establish a Food and Drugs Authority, a single regulatory body responsible solely for "controlling the quality, safety and effectiveness of food, drugs (including herbal drugs), cosmetics and medical devices."²⁴⁰  Previously, "uncoordinated enforcement of the respective legislation," that is, the Food and Drug Ordinance cap 93 of 1946 and then the Pharmaceutical and Poisons Act of 1978, "overlapping of activities among state organs," and "increased volume of food, drugs, cosmetics and medical devices in the market," coupled with an "[i]nadequacy of skilled staff and lack of working tools," allowed illegal foods and drugs outlets to "mushroom" and counterfeit and substandard products to flood the market.²⁴¹

As in other developing nations, a gap may appear between the law's detailed provisions and EAC member state agency officials interpretation and implementation in practice.   That gap may reflect the agency officials' lack of resources required to implement the legislation, as well as their inability to implement rules that appear too complex.  Kenya's registration law, for example, allows the Pharmacy and Poisons Board to employ compulsory licensing and parallel importing tools to encourage domestic manufacture or the import of generic versions of innovator drugs, at a fraction of the cost of the innovator versions.²⁴²  Nevertheless, as of the latest available report, the PPB had not utilized those tools.  Given the significant differences in price between patented and generic versions of the same drug, Kenyan NGOs and civil action groups found this fact troubling.   Christa Cepuch, a pharmacist with Medecins Sans Frontieres, declared, "There is no legal barrier to stopping the government from importing cheaper ARVs that are of a good quality. It is time that we used our strong Intellectual Property Act for this purpose."²⁴³

Kenya has failed to implement its TRIPS flexibilities, probably because of the complexity of the process of obtaining a compulsory license.²⁴⁴ Also, Western countries and Non-Governmental Organizations with a strong pro-intellectual property rights bias strongly influence governmental policy-making.  They discourage deviations from IP-compliance.²⁴⁵ Government has broad discretion in exercising its options under the law.  (With respect of the supply of medicines, that scope of discretion likely constitutes the law's principal weakness.)

In terms of producer adherence to GMP standards, the law requires the Kenyan PPB to inspect manufacturers and retail outlets.  It contains, however, no adequate national guidelines on inspection.  In consequences, PPB inspectors do not effectively enforce compliance with the laws laid down.²⁴⁶ Without implementing rules and regulations, laws such as Kenya's on GMP inspection or Rwanda's on pharmaceutical registration become meaningless.  To make adequate GMP inspections likely, the relevant DRA must prescribe regulations to guide the inspectors.

Inadequate resources appear to be the largest obstacle to effective registration and GMP inspection in the EAC member countries.  Without adequate funding, the five respective DRAs cannot buy updated quality testing equipment, properly train existing staff, hire additional staff, or hire and train more GMP inspectors.
   
The National Drug Authority of Uganda, for example, receives 20 percent of its funding from the government budget, 20 percent from registration fees, and the rest from foreign aid (60 percent)   The UNDA charges 0.5 percent of the value of an imported product as a fee for inspection and testing.  It provides free testing for the first three batches, however, and charges for testing additional batches.  To avoid paying testing fees, some manufacturers send only three batches of their drugs.  Because it tests for free and does not get any future compensation for other batches, UNDA suffers.²⁴⁷ When foreign aid diminishes, UNDA also suffers.²⁴⁸ Irregularity in funding necessarily leads to fluctuations in the review and registration of drugs (either it takes more time to approve drugs, or drugs win a license without adequate testing.)  UNDA's chairperson admits that lack of funds has hampered UNDA operations.  For example, in the past four years, the government had not given funds to UNDA: "We depend entirely on drug fees and WHO."²⁴⁹ 

Of the EAC countries, Rwanda and Burundi suffer most from lack of resources.  As a consequence, to this day neither government has instated a registration body.  In these two countries, government procurement of medicines falls far below donor procurement.  In Rwanda and Burundi, for imported drugs these donors usually require either FDA approval or WHO pre-qualification.  (For example, the PEPFAR program requires FDA approval for all its drugs.)²⁵⁰  As mentioned above, for those who are not being treated by international NGOs, this can have adverse effects on the price and availability of medicines.
   
That an actor need not carry out functions at a specified level creates an opportunity for the actor to function below optimal levels.  Kenya's and Tanzania's DRAs carry out minimal GMP inspections, for example, because, under the current laws, they are not required to do more: "the Tanzanian DRA applies national GMP standards, which do not comply with international standards.  In addition to that, the Quality Assurance Departments of producing companies conduct their own internal audits."²⁵¹  The TFDA claims it takes an active role in assisting local manufacturers with improving the quality of their essential drugs production. As of 2005, however, TFDA considers that manufacturers that meet TFDA standards meet only "minimum standards."  Perceived weaknesses in the current system have led TFDA to insist on higher GMP standards, on par with those used by the WHO prequalification system. ²⁵² 

The Kenyan PPB also inspects and licenses pharmaceutical manufacturers and retail outlets.  It has fallen behind on enforcing compliance with the national medicines legislation.  As in Uganda, Tanzanian law does not provide TPPB with guidelines for inspection.  As a result, although required by the Pharmacy and Poisons Act, TPPB does not properly inspect manufacturers' plants for good manufacturing practices. ²⁵³

Corruption frequently arises when the rules and laws give officials excessive discretion.  In Uganda, officials may have too much discretion, and the registration process may not have transparency and accountability mechanisms.  Thus, corruption ensues.  In 2004, for example, a whistleblower accused two Ministers in the Ministry of Health of taking bribes from counterfeiters and, as a quid pro quo, of registering counterfeit or substandard medicines.  The whistleblower testified in a criminal case against them.  After the Ministers posted bail, UNDA reinstated them – and terminated the whistleblower's job, later advertising the job with specifications for qualifications lower than his.²⁵⁴  When law endows an official with excessive discretion, or enables the officials to avoid accountability, opportunity yawns for the official to use public position for private gain.

Given their extreme lack of resources, the DRAs of the five EAC countries sometimes find it in their interest to put registration on hold (e.g. Burundi) or to scale down registration processes when resources wane (e.g. Uganda)   Others turn to reliance registration in order to ensure the quality of medicines entering their markets without having to test for this quality themselves.  In Rwanda, for example, the Directorate of Pharmacy (DOP) is responsible for setting national drug policies, drug registration, and regulation of pharmaceutical facilities and technicians.  According to USAID in 2003, budgetary and human resources shortages have led DOP to cut several of these functions, including "drug registration, quality assurance, regulation of the pharmaceutical profession, and practices and provision of drug information."²⁵⁵ 

DRAs also may divert resources away from registration towards what they deem more pressing regulatory functions, such as policing their national markets for counterfeits.  Without a constant source of income, instability threatens the registration process. When registration fluctuates in efficiency, so do the problems associated with ineffective registration – delays, poorer quality drugs entering the market, and an inefficient selection process for cheaper quality medicines.

Manufacturers – Why do local and foreign manufacturers supply sub-standard or over-priced medicines to the EAC?

For several reasons, during the registration process local and foreign manufacturers of both generic and patented drugs behave problematically. In order to design an effective legislative solution for the social problem this Report and bill address, this Report explores the reasons for (that is, the causes of) those behaviors.

The pharmaceutical laws of all the EAC member countries (except perhaps Burundi) require a manufacturer to register with the respective country's DRA each drug that the manufacturer proposes to market.  To do so, the manufacturer usually must to submit a dossier for the drug.  In that dossier, the manufacturer submits proof of the safety, quality and efficacy of their drug and its components. In addition, where a country has particular GMP standards, the relevant national DRA inspects the manufacturer's production facilities for GMP compliance.²⁵⁶  In Kenya, Tanzania and Rwanda (and most probably Uganda to a certain degree), however, while the laws on the books require those actions by manufacturers, the DRAs in these countries do not enforce those laws to the letter.  By bribing DRA officials, manufacturers can therefore register their medicines²⁵⁷ without meeting national GMP standards.²⁵⁸  Other reasons may also prevent full enforcement. L'Art Pharmaceutique, Rwanda's drug registration law, remains unenforced.²⁵⁹  No Rwandan registration authority exists.

Kenya possesses the largest number of local manufacturers.  The problems that beset them seem not dissimilar to those that affect other manufacturers in the region.  Over the past decade, Kenya has seen very low economic growth.  Over half its population lives below the poverty line.  Its resources available for manufacturing range correspondingly low.  The generic manufacturing industry's R&D investment per capita stood at less than 1 cent in 2004 and patents per 1,000 people fell below 0.0001.  Most of Kenya's very limited R&D focuses on innovation in manufacturing processes and not in pharmaceutical products themselves.²⁶⁰ 

In addition, Kenya's generic medicine manufacturers lack local primary, secondary and tertiary ingredients for production.  Local manufacturers must therefore import ingredients from India, China and other developing countries, thereby rendering their cost of production higher than in other generic-producing countries.  Other factors further increase the cost of production:  Generally poor infrastructure, antiquated communications systems and high electricity costs (the cost of industrial electricity in Kenya soars to four times that in South Africa and Egypt, and almost twice as high as in Uganda).²⁶¹ 

The inadequacy of the pharmaceutical market constitutes a third major factor affecting local pharmaceutical manufacturers.  Domestic markets alone cannot sustain pharmaceutical manufacturers.  Kenyan manufacturers therefore seek to supply both Kenyan and non-Kenyan markets.  None of the Kenyan manufacturers, however, enjoy WHO pre-qualification.  That lacuna limits the scope of their market to Kenyan government procurement and perhaps purchases from other countries that do not themselves have high quality standards.²⁶² Depending on the type of trial, size of the trial group, and the area of study, clinical trials in Kenya cost a minimum of US$70,000.   This cost reaches far beyond the means of most of Kenya's pharmaceutical manufacturers.  Unless necessary, they avoid conducting trials.²⁶³  This further limits the scope of local manufacturers in terms of the kinds of medicines they can produce and market in the region.

The size of the domestic and regional markets also limits Tanzanian manufacturers.  Because they do not comply with international GMP standards and because international donors supply drugs that require WHO pre-qualification, Tanzanian manufactures also suffer from limited access to those markets.  According to one report on the viability of pharmaceutical production in Tanzania, the Tanzanian market is not large enough for manufacturers to achieve economies of scale, and their prices are therefore not competitive with generics producers from abroad.  Only because of a 15 percent preference they receive from the Tanzanian government can these manufacturers sell their drugs.²⁶⁴  A vicious cycle of limited resources and less marketable medicines thus trap local manufacturers. The higher costs of local production and the fact that local manufacturers do not comply with GMP standards render their products less marketable.  That in turn prevents them from making enough profits in order to upgrade their manufacturing processes.

In Kenya, the Pharmacy and Poisons Board does not authenticate or regulate local manufacturers' in-house trials or pre-formulation studies.  While companies conduct in-house experiments, the quality of these studies remains unknown.  Because the law does not require them to do so, these companies do not willingly share the findings. ²⁶⁵

TFDA does not require Tanzania's manufacturers to comply with international GMP standards, but only requires them to comply with Tanzanian standards.  Those fall below international requirements.  In 2000, the TFDA's predecessor regulatory body (the Pharmacy Board) performed GMP inspections at each of 10 registered local manufacturing plants.  Because they failed the inspection, TFDA had to order three of these plants to close down.  The Board decided, as a solution, to assist manufacturers in upgrading their level of compliance.  It decided to do so by letting each company set its own timetable to meet Tanzanian GMP standards and by merely monitoring their progress.²⁶⁶By allowing manufacturers to set their own pace in compliance, the Tanzanian regulatory authority, in a sense, gave them further opportunity not to comply.
 Similarly, in Rwanda, two small manufacturers locally produce 7 percent of drugs sold.  Neither of these manufacturers have GMP certification.  In a country with at best weak national quality control, this 7 percent of the national supply likely proves of substandard quality.²⁶⁷

Because their domestic governments do not require them to abide by high standards, and in a practical sense, they have an interest in avoiding, if they can, costly GMP and clinical study procedures, these manufacturers fall below international GMP standards.  In Kenya, as mentioned above, clinical trials can cost about $70,000 per trial.  In South Africa, those trials cost only about $50,000; in India, about $30,000.  Their domestic DRA does not require clinical trials, and local Kenyan companies therefore avoid them altogether.²⁶⁸  By avoiding clinical trials and complying only with domestic GMP standards, however, these local manufacturers bar themselves from the enormous markets of donor procurement within their region.  They also bar themselves from the export market in other countries within the region, and perhaps beyond.

Manufacturers also have a significant role in registration delays.  They often have little incentive to provide DRAs with the information needed to evaluate their drug promptly.  Local manufacturers find it difficult to conduct their own clinical or other tests and therefore must rely extensively on the registration data of foreign patent-holders, who for their part try their best to keep their registration data secret. 
Markets in EAC member states generate relatively little demand, and their DRAs have a reputation for taking time with registration.

An ideology that prioritizes profits over public policy justifies the high prices charged by foreign patent-holding manufacturers.  While Big Pharma recognizes the public health emergencies that their drugs can alleviate, they put profits first.  They attempt to alleviate public health crises only within the framework of this for-profit model.  Hence the answer of Jean Pierre Garnier, the head of GlaxoSmithKline in the UK, to the access to medicines problem:  "order from GSK in bulk, perhaps for the whole of sub-Saharan Africa, and the price will drop and, secondly, persuade the rich countries to support the Global Fund so that poor countries will have the money to buy GSK's drugs. It's win-win for Glaxo." ²⁶⁹

In the meanwhile, however, if a country's demand is smaller, Glaxo argues that it must sell drugs at higher prices to cover the costs of its own research and development for this drug and other future drugs.  In justifying their patent protections, Big Pharma argue that they deserve to profit from their own inventions. Garnier, like the heads of other drug companies, sees generic manufacturers as "pirates," a threat to the future existence of Big Pharma: "there is an economic war going on. This is a great opportunity for the Indian and Brazilian generic companies to conquer the world. If they could just get rid of our patents then the whole developing world would open up to them."²⁷⁰

The fact that generics producers outside and within the EAC focus on manufacturing smaller quantities of generics, solutions and injectibles rather than on doing R&D on new drugs for neglected diseases also ties into the prioritization of profits over the public interest.  In their case, if they do turn to new medicines research and production, these producers may go under.  These relatively small, local manufacturers cannot benefit from the economies of scale larger foreign exporters enjoy.  The Guardian Newspaper explains the difference in economies of scale between large brand name producers and smaller generics: "Cipla [an Indian generics manufacturer] only has the capacity to produce small quantities of the drugs .... With the very low manufacturing overheads in India, they offer cheap prices for thousands of tablets that would have to soar if they needed to produce millions. The overheads for producing Combivir in GSK's Kent factory, on the other hand, go down as the bulk goes up."²⁷¹  Their focus on generics production may therefore not rest so much on ideological reasons as in a cost-benefit analysis.

To recapitulate:  DRAs fail to coordinate national health policies and essential drug lists and fail to fast-track essential medicines because they have no mandate to do so.  Because they lack the resources to undertake these measures, they also fail to assure thorough quality testing and GMP inspections.  Finally, delays in registration also results from low DRA resources, especially, lack of competent staff and equipment to conduct testing and inspections. 

Manufacturers contribute to ineffective registration processes by prioritizing profits over the public good (this is often the case with foreign patent-holding manufacturers) and thereby charging unaffordably high prices for their drugs, or failing to meet international GMP and quality standards so that they can scale up production by catering to donors in the EAC (this is the case for foreign and local generic manufacturers)

A.    Introduction

The East African Community, a regional organization, consists of five partner states (Kenya, Tanzania, Uganda, Rwanda and Burundi).   These share similar health and access to medicines problems.  The Heads of State who signed the Treaty for the Establishment of the East African Community in 1999 proposed to "focus on a collective response to health problems." ²⁷²  The current national registration systems hamper this collective response of the EAC to its health problems.  As we have seen, it exacerbates the shortage, high prices, and the questionable quality of essential medicines that enter the five EAC countries. 

In proposing a partial solution to the current problems with national registration systems in the EAC, we must therefore address the reasons behind problematic behaviors by both national DRAs and manufacturers.  This section first proposes several alternative solutions and evaluates them in terms of their effectiveness in tackling the problematic behaviors described in this report.  Next, this section selects the most effective solution, and proposes a bill to implement that solution, a justification for its provisions, an analysis of its costs and benefits, and recommendations for monitoring and evaluating the effectiveness of the bill.


B. Alternative Solutions: Ways to improve the current national registration systems of the EAC
   
1. Selecting the quality standards to apply in the quality assurance stage²⁷³

The quality standards that registration agencies adopt must balance the need for effective medicines of the highest quality with the need for essential medicines now.  Creating a registration system that espouses the highest drug quality standards (e.g., adopting the U.S. Food and Drug Authority's quality standards), can easily create bureaucratic delays, or impose excessive demands on research-based and generic drugs, delay distribution, and increase systemic costs.²⁷⁴  Creating a system that allows medicines in with the least possible delay, however, could mean a compromise in quality testing.  Consumers (donors and patients) need assurance that, whether innovator drugs or generic, imported or locally produced, different brands of the same drug have the same effect.²⁷⁵  Without this uniformity of efficacy, at least in registered medicines, donors will continue their current practices of purchasing only WHO pre-qualified or FDA-approved medicines.  Patients will continue to purchase the cheapest remedies first, working their way up the price ladder as each remedy proves ineffective in treating their symptoms.

To improve the quality of medicines entering the EAC countries, the five national DRAs might implement quality standards currently used globally.  Those five DRAs might adopt the WHO's GMP standards.  Adopting such a uniform standard would enable producers who meet this standard to sell their medicines to donors domestically and to win GlobalFund tenders.  It would also enable them to sell their medicines outside their domestic markets and within the region.  That solution, however, does not address the other two problems associated with current registration practices – delays in registration and higher-priced medicines.

More: only a minority of medicine manufacturing facilities in the world currently produce medicines to GMP standards.  According to the UN Millenium Project Task Force on HIV/AIDS, Malaria, TB and Access to Essential Medicines ("the Taskforce"), "Achieving GMP is often an incremental process that, given the economic and logistical constraints inherent in many developing countries, will take longer for some manufacturers to fully implement than others."  The Taskforce therefore recommends applying GMP standards and evaluating companies that do not meet these standards on a case-to-case basis, based on the nature of the medicine concerned: "[N]o flexibility can be allowed for medicines with a narrow therapeutic margin, but some flexibility may be tolerated for medicines with a broad safety margin."²⁷⁶

2.  National fast-tracking for essential medicines

Some EAC members (e.g., Uganda) have established a national fast-tracking mechanism to prioritize and quickly approve medicines for high-impact diseases.  WHO prequalification might provide a gauge to measure which medicines to prioritize for AIDS, malaria and TB. ²⁷⁷  By fast-tracking essential medicines to treaty priority diseases (determined by the national health policy of each country), a country DRA can bring urgently needed medicines to the front of the registration queue.  Without further quality testing or GMP inspection by the national regulatory authority, the local DRA could approve a WHO pre-qualified medicine.

This solution addresses the registration delay and medicine shortage issue discussed in this report, but fails to address price and quality issues.  In fact, by fast-tracking medicines to treat certain diseases, national DRAs could exacerbate the problem of low-quality medicines entering their countries.  Fast-tracking medicines too often means less-stringent testing of that medicine.

3.  Local production of generic essential medicines

Another nationally based alternative would encourage the establishment of local manufacturing of generic medicines under voluntary license agreements²⁷⁸ from the patent-holding companies for essential medicines.  These local manufacturers could supply the local market through a preferential government subsidy.  If one or two of the EAC countries could produce medicines locally, e.g. Kenya and Tanzania, a regional market created by a regional pharmaceutical free-trade system could support such production with sufficient demand to justify the costs. Per contra, production of drugs within a developing country solely for domestic use might fail because the producer cannot take advantage of economies of scale.  Expanding the market for their increased production might create enough demand to bring down costs of production.²⁷⁹ 
Bioequivalency tests and compliance with GMP standards seem critical to ensuring quality products from these manufacturers.  Nevertheless, the registration system could foster the growth of the industry by fast-tracking registration of these medicines,
     
Requiring current and future generic manufacturers within these countries to comply with GMP standards and to ensure bioequivalency of their drugs with the originator drugs could lead to the inclusion of these drugs on the WHO's prequalification list.  Inclusion would open up regional markets to their products and this could foster a regional system of production and distribution of high-quality and low-cost essential medicines.²⁸⁰
   
Voluntary licensing of patented drugs by the EAC community could encourage national or regional production.  Subject to compensation for the patent holder, and relatively amicable terms between patent holder and licensing countries, voluntary licensing promotes technology transfer.  Local production could also drive down the cost of imported patented pharmaceuticals through increased competition. 

This solution would require a sea-change in manufacturing practices within the EAC.  Generics producers currently limit themselves to "simple, high-profit formulations."  For them to produce more and cheaper medicine for the EAC market, their products would have to meet bioequivalency requirements and WHO GMP standards, and become WHO prequalified.  According to the Taskforce, "[p]roducers wishing to ensure quality standards can avail themselves of WHO technical assistance to meet GMP and prequalification requirements.  They can also pursue cooperative agreements with larger manufacturers that can provide technology transfer and staff training."²⁸¹Taken in the context of generic production, WHO prequalification would not only assure GMP and quality pharmaceutical products, but would also give local producers, "as of January 2005, access to programmes and markets governed by procurement rules imposed by international donors such as the Global Fund and the World Bank."²⁸²

Requiring local manufacturers to ratchet up their manufacturing practices and drug quality to meet international standards such as those, set out by the WHO could improve the quality and price problems within the EAC in the end.  In the short term, however, solely focusing on local manufacturers may actually mean an increase in costs of medicines compared to generics from other countries, because local manufacturers currently incur higher costs of production than, for example, Indian or Chinese manufacturers.²⁸³

4. Compulsory licensing and parallel importation

Among other hurdles, intellectual property protection blocks importing and producing cheap versions of expensive originator drugs.  Patents prevent generic manufacturers from copying patented drugs – and patents run for 20 years after production the drug.  During those 20 years, pharmaceutical companies try to recover from the drug's sale their research and development costs for this and for other, failed drugs.  To do that, they frequently charge many times their actual cost of production.  This inflated price frequently has devastating effects in developing countries like those in the EAC.  Consequently, costs of treatment for HIV/AIDS exceed the income of many citizens.  Governments cannot fully subsidize the costs. 

The 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) created a global comprehensive patenting system that required a WTO member to comply.  The treaty extended to the Less Developed Countries and Least Developed Countries extra time to comply.  (For Least Developing Countries, the Doha Declaration extended until 2016 the timeframe for compliance (Paragraph 7, Doha Declaration).  Until then, those countries need not offer patent protection for pharmaceuticals.²⁸⁴

As one solution, as Less Developed and Least Developed Countries, EAC countries could make full use of the leeway given by TRIPPS.  That treaty provides several tools to facilitate their importation of cheaper generics.  First, by permitting technical preparation for registration of the same medicine from an alternative source (i.e. a generic version) before the patent expires, after it does expire, the Bolar Clause allows fast introduction of a generic. 

As a second possible solution within the boundaries erected by TRIPPS, Article 31(f) details the procedures of compulsory licensing and government use authorization. By a compulsory license, government authorizes a producer to replicate a patented drug without the permission of the patent holder. A Government Use Authorization licenses the government to do the same – i.e., produce a patented drug without the permission of the patent holder.  Under Article 31(f), the government must compensate the patent holder for its use, but has discretion as to how much compensation to pay.  Before using a patented drug in this manner, Article 31(f) requires a government to seek permission from the patent holder for use of the patent [i.e. seek a voluntary license].  If the government acts in "a national emergency or other circumstances of extreme urgency or in cases of noncommercial use" (WTO 1994), government may escape even that requirement.  The government has discretion in determining what constitutes a national emergency.  'Noncommercial use' includes public sector use.  Purchase by EAC governments of generic medicines for treatment of critical diseases would count as 'noncommercial use.' 

Finally, as we have seen, ordinarily in certain conditions, a country can manufacture generics for sale within that country – that is, a generic manufacturer can exploit only the manufacturer's home-country market.  Under TRIPPS's Paragraph 6, if both an importing country and an exporting country issue compulsory licenses for a particular generic, the generic may be imported into the country lacking production capacity.  That exception ensures that countries without production capacity can use compulsory licensing to import medicines from generic producers abroad.   This exception becomes especially important to countries such as Rwanda, which lack capacity to manufacture generic versions of essential medicines. 

This process, however, proves cumbersome.  Because of the many bureaucratic hoops through which both the importing and exporting countries must jump, EAC countries will probably not use it freely.²⁸⁵  (In its current attempt to purchase anti-retroviral drugs from a Canadian pharmaceutical company, Rwanda became the first country to exercise its Paragraph 6 right.²⁸⁶

5. Paying for pharmaceutical registration

DRAs could charge higher registration fees and use that money to retain quality staff, fund the DRA, and stimulate introduction of generics and perhaps even new chemical entities.  Currently, the registration fees charged by most developing countries' DRAs have no relation to cost of registration.²⁸⁷  Basing the fee on cost of registration could increase the funding available to the DRA, which might translate into more resources – for example, better-trained staff and more testing equipment.  Given the small size of individual EAC national markets compared to other potential markets in the world, charging higher drug registration fees, however, may discourage foreign generics producers (and perhaps even foreign patent-holding producers) from marketing their drugs in the country.

C.  Description of the Proposed Bill: Joint Registration in the EAC

The proposed bill creates a Joint Registration Authority ('JRA').  The bill details the composition of JRA, how it will make its decisions, and what issues the Commission will consider before instating a joint registration and license procedure for medicines and drugs for EAC.
 
JRA will consist of two individuals from each EAC member country and one Chairperson.  Within one month after enactment of this proposed bill and ratification, the Minister of Health for the five EAC member countries will meet at the call of, and at a time and place set by the Minister of Health of Burundi.  At that meeting, the Ministers of Health will cast lots to determine which of them will chair JRA for the first year of its existence.  Thereafter, the Ministers of Health of the five countries will serve as Chair of JRA in turn, following the alphabetical order of the five member states.  Each chair will serve as chair for one year.

A member state will appoint two members of JRA, the first of whom will in the first instance serve two years and the second of whom will serve four years.  Thereafter, a member of JRA will serve four years (thus ensuring that at least half of JRA members will have at least two years' experience on JRA).  (That ensures that JRA, consisting of two members from each EAC member state plus the Chairperson, will not tie on a vote, and that member states have equal representation on JRA.)  Should JRA need to decide a contentious matter by vote, it does so by majority vote, with the Chair having a casting vote. These appointees must have credentials based on the appointee's education, experience and expertise in the field of pharmaceutical regulation or registration.

The bill also requires the JRA to meet not less than annually at a time and place that JRA will, set by rule, and more often at the call of the Chair.  The Chair sets the agenda for a meeting of JRA, and will include in the agenda a matter requested by any two members of JRA.  The proposed bill also includes details about the tenure and terms of service of JRA members.

The bill also includes a statement of the powers and duties of JRA.  These include not only general 'housekeeping' duties (for example, the power to hire and fire staff),  but also its substantive duties, especially, its duty to set standards for the licensing of a new chemical entity ('NCE') for sale within EAC and the manufacturers and the processes that produce them.  

The bill also requires JRA to make regulations for its governance and decision-making.  It sets forth criteria and procedures for licensing that JRA will use, subject to JRA's adopting alternate criteria and procedures.  These criteria consist of the following:

1. Where the NCE has received approval from an NCE licensing board of recognized international standing, for example, the Food and Drug Administration of the United States; or,
2. Where JRA decides that the Regional Quality Control Laboratory will determines the safety, efficacy and quality of the drug by a chemical and manufacturing data review;
3. Whether the availability of the NCE will prove in the public health interest; and
4. Whether the drug proves safe, efficacious and of acceptable quality; and
5. Whether –

• the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO, or
• the manufacturer is on WHO's list of prequalified suppliers, in which case JRA will approve the manufacturer or the individual products listed using a fast-track mechanism.

The bill also requires JRA to license locally manufactured NCEs and traditional medicines. Until JRA promulgates specific regulations on NCEs manufactured by local manufacturers, or concerning licensing traditional medicines, JRA shall adhere to the criteria for NCEs set forth above.

The bill as well prescribes procedures for JRA decision-making.  It requires that after developing a proposed regulation, whether for its own governance or for the licensing of an NCE or approval of a GMP, JRA must publish the proposed regulation in a newspaper of general circulation in each of the EAC member countries, inviting comment, and setting a reasonable time limit for those comments.  After expiry of the time limit, JRA will finalize the proposed regulation, and publish it.  JRA will either include in the final version of the regulation a suggestion made in a comment, or, in an accompanying document, describe a comment that it rejected, and explain why JRA rejected it.
   
The public may attend a meeting of JRA. A member of the public may also access freely correspondence of JRA, internal memoranda and other JRA materials.  
   
The bill also contains provisions for funding JRA and its operations; resolving disputes that inevitably will arise; and making the transition from the present to the joint licensing systems.  JRA will receive funding as part of EAC's central government budget.  Disputes concerning congested licensing decisions and the like will in the first instance fall before an official of JRA detailed to hear the case and decide it.  From that decision, an intra-agency appeal lies to the senior EAC civil servant in JRA, and thence to the Head of EAC civil service.  Until JRA develops regulations to the contrary, licenses granted by an EAC member country's DRA will apply with respect to sales in that country, but not elsewhere in EAC.
   
The proposed bill also creates the East African Licensing Scientific Board ('EALSB')   Experience everywhere teaches that wrong-headed administrators and politicians can pressure the licensing body to ignore sound science in favor of ideology-determined (and sometimes corrupt) licensing decisions. 

To undercut political or ideological influence in the licensing decision, and especially, pressures to ignore sound science, this Act creates EALSB as an independent advisory body.  For scientists working in EALSB, career decisions – promotions, work assignments, remuneration – will depend not on irrelevant or corrupt factors, but on scientific merit.   EALSB will serve as JRA's scientific advisor.    It consists of three qualified scientists, appointed by the General Secretary of EAC.  These scientists, with the staff they will employ, do necessary testing of NCEs, drugs, medicines, and foods. It will make recommendations to JRA about licensing these.   Unless JRA explains in detail why it does not do so – and makes public those reasons – JRA must follow EALSB's recommendations on licensing decisions.
 
D.   Justification

The national NCE licensing systems in EAC countries suffer three endemic problems: registration delays, lack of prioritization for essential medicines and registration of lower quality medicines.   A fair and equitable system to ameliorate these problems requires the creation of a joint registration system to govern registration for the entire East African Community. 

The World Health Organization suggests several reasons why a regional approach to pharmaceutical registration will benefit countries in Africa: "Regional and sub-regional approaches and global initiatives are considered for:

• Pooling resources, to deal with capacity challenges,
• Reducing duplication of effort, redirect resources
• Standardizing requirements...
• Legal mechanisms to jointly negotiate
• Promotion of good governance"²⁸⁸

These benefits of joint registration specifically address the main problematic behaviors brought up in Sections II to IV of this report.  One of the main constraints on the current Drug Regulatory Authorities of each of the five EAC countries, for example, consists of a crippling lack of resources – especially so for Rwanda and Burundi.   As we have seen above, these two countries have little to no resources to dedicate to pharmaceutical registration. They have all but given up on the process of registration.  Pooling the resources of the five countries will help especially those countries currently struggling to perform pre-registration product evaluation.  One authority – JRA – will use the resources that previously tried to support the operations of five country DRAs.  JRA will have sums available for research equal to the funds that all five had previously individually to conduct similar research. 
   
The reduced duplication in efforts and overlap in processes makes this pooling of resources especially effective.  Previously, for example, each country's DRA would have had to evaluate one pharmaceutical product individually in each of the five countries for safety, efficacy and quality.²⁸⁹ Each DRA would be conducting similar tests on this pharmaceutical in its own labs, and would presumably come to the same conclusion (resource constraints and quality of testing aside).   Under a joint system, of each pharmaceutical product, JRA will make only one assessment – not five. 

Standardizing the requirements of registration will address the problem of arbitrary decision-making within the current drug regulatory authorities.  Creating consensus in quality standards will also enable manufacturers more easily to comply with standards, as they confront one, not five different set of criteria for their drugs.  Standardized quality and GMP requirements throughout the EAC will also facilitate trade within and between EAC countries in essential pharmaceuticals.  Currently, "[n]ot being coordinated on the regional level, national regulation authorities hamper East African trade flows significantly. Each time medicine passes a border, the registration process has to start from the beginning, trade flows are delayed and intraregional trade becomes less beneficial." ²⁹⁰
   
A joint registration system will give the EAC countries a legal framework within which to negotiate with each other on registration policies, as well as to negotiate with manufacturers and distributors on prices of drugs.  Under the 2003 Doha Declaration,²⁹¹ a customs union a majority of whose members rate as LDCs can obtain one compulsory license for use in the entire union.  A majority of EAC members do so rate (Tanzania, Uganda, Rwanda and Burundi). Once one EAC partner state obtains a compulsory license for a NCE, the manufacturer can export the generic drug from that country to another EAC member country.  (That exportation must, of course, accord with the importing country's patent laws.)²⁹²  If EAC decides that importing a generic version of a patented drug furthers the public health interest, the Joint Registration system allows EAC member countries to obtain compulsory licenses for that drug. 

It also means that the EAC as a bloc has greater negotiating powers with Big Pharma.  Compared to each of the member states, EAC has increased ability to negotiate down prices of patented drugs.  It has all the power that goes with bulk purchasing of a drug.  That power finds support in the potential that, if negotiations fail, EAC or one of its members might invoke the compulsory licensing provisions of Doha.

Finally, creating a joint system will promote good governance. The proposed bill establishes a more transparent decision-making body, accountable for its actions to each EAC country and to other stakeholders in the registration process.  By creating a Joint Registration System with built-in accountability and transparency mechanisms (e.g. the requirement that each registration decision is justified in a written report made publicly available at a central office), some of the problematic practices currently taking place within national DRAs may be overcome.

1. Costs and Benefits of a Regional Registration Body

What potential drawbacks does a joint EAC registration system have?  What benefits? A joint registration system creates the possibility of conflicts between the five parties of the EAC on decisions of policy, process, and resource allocation.²⁹³  Already, for example, tensions between EAC member states have risen in relation to pharmaceuticals trade.  In August 2005, negotiations between the then three members of the EAC (Kenya, Tanzania and Uganda) appeared dominated by Kenya.  After four years of EAC negotiations, the three partner states had agreed to follow the Tanzania Common External Tariff (CET) model (a ten percent tax) for finished pharmaceutical products for retail use (with  an exception for ARVs, anti-malarials, anti-TB and government medicine procurement, for which there was an agreement not to tax on entry).   Upon implementing the CET agreement (January 1, 2005), however, it appeared that as implemented the new protocol taxed at entry percent all pharmaceuticals, including ARVs, anti-malarials and anti-TB medicines.  

The multinational pharmaceutical companies based in Kenya launched a heavy attack on the CET as implemented.  They lobbied the Kenyan government to remove all tariffs on pharmaceuticals. The Kenyan government then unilaterally suspended the tariff on pharmaceuticals, thus returning to the pre-CET rate of zero percent.  Kenya's unilateral action went against the redress mechanism ordained by EAC protocol.  That protocol stated that only the Council of Ministers – not an individual state – could suspend the EAC-agreed tariff.²⁹⁴ This incident strengthened a general fear amongst smaller EAC states that the larger member states will not hear their voices – or will simply ignore them.  That suspicion could undermine the successful establishment of a Joint Registration System. ²⁹⁵

The creation of a Joint Registration System obviously involves the expenditure of time and money.  Either EAC or the individual country must relocate national registration staff and equipment to a central location, and re-train staff effectively to run the new registration system.  Start-up costs aside, the running costs of a Joint Registration System should prove far less than the combined costs of running five separate registration systems in five countries.

2. Monitoring and Evaluation

In its early years at least, monitoring and evaluation of the new joint registration system seems indispensable. To that end, the proposed bill provides an independent inspectorate to monitor performance of the regional system at all levels.  It will report at least annually.  The inspectorate will consist of senior/ well-respected individuals from the health sectors of each EAC country to ensure representation of different national interests and ensure non-bias.  Each country's Minister of Health will appoint one inspector, who must have a higher degree in public health or a medical qualification, and some experience in drug regulation and/or registration.  Their reports of success of certain processes should ensure that JRA will maintain those processes.  When the inspectors criticize other practices, the inspectors should accompany their remarks with recommendations for consideration by JRA.  JRA can then model new regulations or practices these recommendations.

The bill laid out above inevitably calls for broad rule-making powers in JRA.  As the registration practices of the joint EAC community improve, JRA can improve GMP and quality standards.  Quality improvement will come – gradually.  More effective implementation requires that JRA build resources and train staff. GMP and quality standards will of course begin at the level permitted and existing staff and equipment levels.  The Inspectorate and JRA must, however, develop a timeline over which JRA will review those standards and, as resources and staff capacity increase, raise them. The monitoring commission's recommendations will help gauge the appropriate times and levels at which to raise standards.

A joint registration system that combines most of the alternative solutions mentioned in the beginning of this section clearly seems the most effective organization ad process to tackle the problematic behaviors this report has addressed.  It engages the most severe set of problems that DRAs and manufacturers face – the resource constraints of a small developing country with a high disease burden.  To address those constraints, this bill will bring together into a structured relationship the joint resources of the EAC countries. This doing, the bill accords with EAC's plans to harmonize activities across many levels of government and society.  EAC came into being in response to the felt imperative that, working shoulder to shoulder, the EAC countries can conquer many of the obstacles that, when faced by an individual country, seem insurmountable.  In no sector does the strength of all working together seem far greater than the sum of the individual strengths of the EAC member states than it does with respect to perhaps the most essential of governmental duties: Improving for its citizens the delivery of health care.

Current national registration processes, including national DRAs and drug manufacturers alike, constitutes a powerful explanation for EAC citizens' poor access to essential medicines.  This report and bill attempt to address three aspects of ineffective registration practices: unnecessary delays in the registration of vital medicines by national drug regulatory authorities; the effective exclusion from registration of cheaper generics in favor of more expensive patented drugs; and the registration of low-quality drugs because of inadequate pre-registration quality testing and low-level GMP requirements.
   
This research report demonstrates that national drug regulatory authorities act the way they do mainly because of resource constraints, and inadequate guidelines and training, and corruption.  Foreign patent-holding manufacturers tend to prioritize profits over public health.  To retain a monopoly in a particular drug, and thus control over the price, by means both fair and foul, the manufacturer pushes for patent protection and data exclusivity,   Local manufacturers lack the capacity to conduct thorough clinical trials, necessary to advance new medicines and their future domestic production.  Too often, they fall below international GMP standards.  Foreign generics producers lack incentives to export to the EAC under current systems.  Delays in registration and complicated bureaucratic hoops make the small market of each individual country not worth the trouble of registration.

As a solution, this report and bill propose a joint registration system for the EAC.  Because this bill makes available to drug manufacturers and importers all five EAC national markets, the bill's unified registration system will attract imports of cheaper generics as well as innovator drugs.  Creating a joint system will also pool the resources of the five EAC countries, thus avoiding overlaps in registration and quality assurance processes.  Finally, a uniform registration system entailing higher standards of GMP and quality assurance will tend to screen out at the registration level substandard medicines.

A.Composition

1. The Commission shall consist of two individuals from each EAC member country and one Chairperson. 
2. A Minister of Health from one EAC member country shall be the Chairperson, and the Chairperson shall have a term of one year, after which the Minister of Health of a different EAC member state shall take over the Chair of the Commission. 
3. Each other Commissioner shall be appointed to the Commission by the individual EAC members states' Ministries of Health, and shall be chosen from civil society (i.e. they may not be government officials) based on the appointee's expertise in the field of pharmaceutical regulation or registration.
4. A Commissioner may be removed from the Commission by the Commissioner's own state's Ministry of Health if the Commissioner is found to have gravely breached the duties and responsibilities tasked to him or her.

B.Purpose and Function

1. Mission – The mission of the Joint Registration Commission is to establish a Joint Registration Authority for the EAC, in partnership with the EAC's legislative body, through detailed laws. The creation of the JRA shall take place in conformity with the recommendations laid out by study groups, this research report, public input, and the Commission's own expertise.  The purpose of establishing a Joint Registration Authority is to improve access of East Africans in the EAC to quality medicines at affordable prices without delay.
2. Jurisdiction – The Commission shall have jurisdiction over the creation of detailed recommendations to the EAC's legislative body on the laws governing the establishment of the EAC's Joint Registration Authority.
3. Recommendations – The Commission's recommendations and decisions shall be binding on the legislative body – all recommendations made by the Commission to the legislative body shall be implemented as law unless the legislative body is able to show that the Commission's decisions are not in the public interest of the EAC.
4. Decision-making procedures
   
   • The Commission shall consider, in formulating its recommendations:
   • the findings of the study/working groups,
   • public comments on the findings of the study/working groups, which shall be published on the EAC's website and made available for public comment within a week of the Commission receiving such study/working group findings
   • the expertise of members of the Commission themselves, who may submit their individual recommendations in written form for publication on the EAC's website
   • Should the Commission need to settle an issue, the Commission shall vote on the issue and the majority shall win.  If the Commission's vote is tied due to the absence of one member, the Chairperson shall cast the deciding vote. 

C.Decision

1. The Commission shall issue a written decision or report detailing its recommendations to the legislative body.  The Commission shall also publish the report on the EAC website for public comment, and shall leave one month from the date of issuance to the date of submission to the legislative body during which public comments received shall be incorporated into the Commission's recommendations, or the Commission shall append to the report reasons for not including those public comments it has rejected.

D.Monitoring and evaluation

1. Appeals from decisions – A person may appeal from the Commission's recommendations by submitting an objection to the Commission.  The Commission shall either reconsider its recommendations and incorporate the objection's reasoning into its recommendations, or respond to the objection in written form, explaining why it has chosen not to incorporate the objection's reasoning into its recommendations.
2. The Commission shall report to the EAC Ministry of Health, upon the establishment of the EAC Ministry of Health.  Until that time, the Commission shall report to the Sectoral Council of Ministers Responsible for EAC Affairs.²⁹⁶

Recommendations

A. Recommendation to the Joint Registration Commission on the establishment of study and working groups to evaluate the current situation in the EAC:

1. The Joint Registration Commission shall create study groups – one for each EAC member country
   
   • These groups shall evaluate and create reports on the current registration system in terms of:
   • Current GMP standards and their implementation by GMP inspectors
   • Standard of clinical trials by local manufacturers
   • Standard and occurrence of quality testing of imported and locally produced drugs by the current DRA before these drugs enter the market
   • Compliance of the current DRA with the National Drug Policy in selection of which drugs to approve, which to fast-track, etc.
2. In six months, once these working groups have completed their research and created their reports, they shall become working groups
   
   • The country study groups shall come together to form one working group
   • The working groups shall draw up comprehensive programs of action, based on their findings, and the guidelines presented in this research report
   • Once the Programs of Action have been approved by the Joint Registration Commission of the EAC, and endorsed by the EAC Health Commission, the EAC Joint Registration Commission shall draw up a Program of Action based on the recommendations of the Working Groups for unifying registration, its own expertise and on recommendations from the public, and shall decide on the modalities and mechanisms for implementation, coordination, monitoring & evaluation and, to the extent possible, provide short-term and long-term financial provisions for the transition.

B. Recommendation to the Joint Registration Commission on the necessary functions of the Joint Registration Authority:

1. Registration of imported New Chemical Entities (NCE's): The Joint Registration Commission shall mandate the Authority to consider in its evaluation of NCEs the following:
   
   • Whether the availability of the NCE is in the public health interest and
   • Whether the drug is safe, efficacious and of acceptable quality, where the Regional Quality Control Laboratory determines the safety, efficacy and quality of the drug by a chemical and manufacturing data review, and
   • Whether the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO
   • Whether the manufacturer is on WHO's list of prequalified suppliers, in which case the Authority shall approve the manufacturer or the individual products listed using a fast-track mechanism
2. Registration of imported generics: The Joint Registration Commission shall mandate the Authority to consider in its evaluation of imported generics the following:
   
   • Whether the availability of the NCE is in the public health interest and
   • Whether the drug is safe, efficacious and of acceptable quality, where the Regional Quality Control Laboratory determines the safety, efficacy and quality of the drug by chemical equivalence testing if manufacturing and chemical data of innovator drug available, or by chemical equivalence and bioequivalence and clinical trials if the manufacturing data of the innovator drug not available
   • Whether the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO
   • Whether the manufacturer is on WHO's list of prequalified suppliers, in which case the Authority shall approve the manufacturer or the individual products listed using a fast-track mechanism
3. Registration of locally/regionally manufactured generics: The Joint Registration Commission shall mandate the Authority to consider in its evaluation of locally manufactured generics the following:
   
   • Whether the availability of the NCE is in the public health interest and
   • Whether the drug is safe, efficacious and of acceptable quality, where the Regional Quality Control Laboratory determines the safety, efficacy and quality of the drug by rigorous testing for chemical and bioequivalence to the innovator drug
   • Whether the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO
   • Whether the manufacturer is on WHO's list of prequalified suppliers, in which case the Authority shall approve the manufacturer or the individual products listed using a fast-track mechanism
4. .Registration of locally/regionally manufactured NCEs: The Joint Registration Commission shall mandate the Authority to consider in its evaluation of locally manufactured NCEs the following:
   
   • Whether the availability of the NCE is in the public health interest and
   • Whether the drug is safe, efficacious and of acceptable quality, where the Regional Quality Control Laboratory determines the safety, efficacy and quality of the drug by a chemical and manufacturing data review, and
   • Whether the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO
   • Where these stan­dards have not yet been attained, the Authority may decide, on a case by case basis, whether a particular product or supplier offering lesser standards can, as a temporary measure, be regarded as acceptable.  Such a decision shall be made with reference to the therapeutic margin a particular medicine has, and shall be justified in a written report to ensure transparency in decision-making
   • Whether the manufacturer is on WHO's list of prequalified suppliers, in which case the Authority shall approve the manufacturer or the individual products listed using a fast-track mechanism
5. Registering locally/regionally manufactured traditional medicines: The Joint Registration Commission shall mandate the Authority to consider in its evaluation of locally manufactured traditional medicines the following:
   
   • Whether the availability of the drug is in the public health interest and
   • Whether the drug is safe, where the Regional Quality Control Laboratory determines the safety of the drug by a chemical and manufacturing data review and
   • Whether the manufacturing facility of the drug complies with Good Manufacturing Practice (GMP) standards of the EAC, where GMP standards are those established by the WHO

C.Recommendation to the Joint Registration Commission on the financing of the Joint Registration Authority:

1. The Joint Registration Commission of the EAC shall meet with the Finance Ministers of each of the EAC member countries to determine how much funding each shall give to the Joint Registration Authority (JRA)  
2. Each country's contribution shall be measured proportionately to its national income, as measured by Gross Domestic Product.
3. In addition to country financing, the JRA shall obtain financing from drug registration fees, which the Joint Registration Commission shall set, balancing the JRA's need for funding against the interest in attracting foreign manufacturers with lower registration fees
4. A third possible source of funding is donor aid from foreign nations.  The Commission shall establish guidelines for receiving such aid, and shall ensure that such aid does not become the major or sole source of funding for the JRA (i.e. increases in donor aid shall not result in a cutting back of state-sponsored or registration fee-sponsored finance)

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Chapter 5: East Africa's Essential... Chapter 5: East Africa's Essential Medicines' Distribution Chain