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Nagoya Protocol and its Implication Pharmaceutical Industry

Espresso-live Speakers
by Kurian Kurien & Aloke Das
1 March 2011

This presentation paper focuses on the treaty on biodiversity which was written in October 2010 in Nagoya, Japan. The presentation highlights how the Nagoya Protocol is expected to affect the pharmaceutical industry in the future. It also highlights the potential impact of the protocol on the procurement strategies of pharmaceutical companies from biodiversity-rich countries. The Nagoya Protocol and Biodiversity: The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits is a landmark treaty that was devised keeping in mind the increasing loss of biodiversity on Earth. It is a supplementary agreement to the earlier convention on biological diversity and provides a legal framework for the objectives of the convention. The Nagoya Protocol and Biodiversity The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits is a landmark treaty that was devised keeping in mind the increasing loss of biodiversity on Earth. It is a supplementary agreement to the earlier convention on biological diversity and provides a legal framework for the objectives of the convention. Access and Benefit Sharing Model The implementation of the access and benefit sharing model involves three stages: Prior Informed Consent for Access to Genetic Resources: The access and benefit sharing model requires that every organization sourcing genetic resources from a biodiversityrich country obtain prior consent from the host country before collecting resources. Consent is provided by a single focal point representing the country, which acts as the intermediary between the organization and the indigenous community that owns the resource. Mutually Agreed Terms for Access and the Use of Genetic Resources: Mutually agreed terms that contain the conditions and provisions for access and benefit sharing between the user, the provider, and other relevant stakeholders is drawn up. Both parties must agree to the terms before resources are collected by the user. Benefit Sharing from the Use of Genetic Resources: Benefit sharing may involve monetary or non-monetary benefits that arise from access to genetic resources or associated traditional knowledge. If the source of a genetic resource is unknown, a single common trust fund is created in collaboration with all the owners of the genetic resource. The payment of benefits is made from this global fund if the origin of the species is unknown or if a transboundary exists. Funds obtained must be used to support the conservation and sustainable use of biodiversity. Type of Benefit Monetary Benefits: Monetary benefits are a percentage of the revenue earned from the sales of a final product derived from the genetic resource collected by the user from the provider. These benefits also include the lump sum amount initially paid to gain access to the material. Non-monetary Benefits: Non-monetary benefits include benefits arising from the process of research and development, such as capacity building and technology transfer through infrastructure, expertise and know-how building, and training through joint research. Process benefits that arise from the sustainable use of genetic resources also fall under non-monetary benefits. Biodiversity-rich Regions of the World The following biodiversity-rich countries are likely to gain the most from the Nagoya Protocol. Latin America Brazil Colombia Ecuador Mexico Peru Venezuela Asia Philippines Indonesia Malaysia India China Africa Madagascar South Africa Democratic Republic of Congo Australia & Oceania Australia Papua??New Guinea   Importance of Biodiversity to the Pharmaceutical Industry The pharmaceutical industry has had a long and fruitful relationship with biodiversity. Large pharmaceutical companies generate close to USD 250 billion annually from drugs directly derived from biodiversity. Taxol, a blockbuster drug that was discovered by scientists of the US government and developed by Bristol Myers Squibb Co. in 1992, contributed close to USD 9 billion between 1992 and 2000. This drug is derived from the bark of yew trees. In 2010, just over 100 natural product based molecules were in clinical trials, a 30% drop compared to 2000 levels. Approximately 80% of pharmaceutical drugs were derived from natural product origins in 1990; by 2005, however, this figure fell to around 50%. In 2010, the natural products mix in the pharmaceutical industry was estimated to be 40%. Currently, 62% of cancer drugs approved by the US Food and Drug Administration come from, or are modelled based on, natural products. For example, Taxol is used to treat breast and ovarian cancer. In 2010, more than 40% of all the new chemical entities were obtained from natural sources. Plants are the major source for drugs of natural origin in the clinical phase. Nearly 48% of drugs in the clinical phase are derived from plants. Drugs currently in the pipeline that are derived from natural sources are mostly cancer and anti-infective medicines. These two therapeutic areas account for 56% of all drugs of natural origin in clinical trials. Impact of the Nagoya Protocol on the Pharmaceutical Market The Nagoya Protocol, especially the Access and Benefit Sharing clause, calls for systems to be put in place. These systems are expected to drive the costs incurred by pharmaceutical companies during the drug discovery phase. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› TheNagoya Protocol could have an adverse impact on the pharmaceutical industry. Many companies feel that the Access and Benefit Sharing clause will increase product development costs and complicate the drug discovery phase. According to the protocol, organizations will have to pay a significant amount of their revenue and royalties to indigenous communities and host countries for the drug they develop from genetic resources. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The revised patent system will also add to the cost of drug development. Due to the rules and regulations laid down by the Nagoya Protocol, organizations would have to execute joint patents with the communities from whom they source resources. For multiple ownership cases, the patenting policy is even more obscure. Present Status of the Nagoya Protocol Each country must ratify the Nagoya Protocol; in addition, the treaty must be passed by a countryï¾Ãƒâ€šÃ‚Æ’??s legislative body. According to the Nagoya Protocol, certain restrictions have to be followed by all organizations that use genetic resources from other countries. For example, each organization is required to set up biodiversity indicators. These biodiversity indicators should consist of a combination of various biodiversity resources that are used by organizations and measure the companyï¾Ãƒâ€šÃ‚Æ’??s impact on the environment. Implementation Issues: ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› Presently, there are no coherent biodiversity indicators that can be used to measure the corporate impact on biodiversity. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› It is difficult to measure the performance of small- to mid-sized companies with regard to ecosystems usage. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The corporate sector has not yet embarked on the large scale incorporation of sustainable biodiversity practices. Signatories of the Nagoya Protocol The Nagoya Protocol is not retroactive and does not affect already existing products. The protocol will apply only for products in the pipeline. Algeria, Brazil, Colombia, Yemen, Netherlands, Denmark, Sweden, Japan, Mexico, and Rwanda have already signed the Nagoya Protocol. It will be open to new signatories from March 7, 2011 to March 6, 2012 and will come into effect within 90 days of the fiftieth ratification of the Nagoya Protocol. Access and Benefit Sharing Industry Practices PRE-ACCESS ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user (i.e. the enterprise or researcher) interested in using the natural resource requests access to the country that provides the genetic resource through prior informed consent (PIC). ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The request should be made to a central focal point designated by the country ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The provider of the resource and all local communities must give prior consent with full knowledge of the targeted use of the genetic resource. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› Mutually agreed terms (MAT) are established between the two parties that define how the benefits will be shared with the exporting country/ community. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› Authorization is issued by a national authority of the exporting country. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› Information on access and benefit sharing is communicated to the clearing house. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› A legally binding ABS contract is made between the provider and user of the genetic resource. BENEFIT SHARING ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user of the genetic resource has to abide by the MAT and conditions. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user party has to establish and maintain appropriate communication with all stakeholders at different levels. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› All communities and indigenous people have to be involved in the research. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user must provide all appropriate information and document it according to PIC/MAT and conditions. It must also ensure compliance with PIC/MAT and other expectations, including benefit sharing. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user must ensure timely provision of benefits according to the schedule outlined in the PIC/MAT contract. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› Compliance with ABS standards is necessary for many companies to secure finance, certify products, and access markets, as well as to be recognized for ethical and sustainable practices. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› The user must verify with stakeholders that obligations and expectations are met. ï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚› A breach of regulations can lead to fines or the loss of future concessionary rights.

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