e-book The TRIPs Agreement - Legal Implementation on Patent Protection and Resulting Impacts on LDCs

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The licence may prescribe that the government itself manufactures the product, or that a third party, such as a generic drugs manufacturer, is authorized to make and sell the p. Under paragraph b , the issuing of a compulsory licence must be preceded by genuine negotiations with the patent-holder to seek a voluntary licence on reasonable commercial terms. The patent-holder must nevertheless be notified as soon as possible in such circumstances. The scope and duration of a compulsory licence is limited to the purpose for which it is issued paragraph c. Finally, the decision to issue a compulsory licence, as well as the determination of the amount of remuneration, must be subject to judicial or other independent review paragraphs i and j.

A presidential decree in Brazil confirmed that compulsory licensing was a valid strategy for countering the high prices of anti-AIDS drugs under Brazilian law.


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At that time, Brazil did not actually issue any compulsory licences but the ever-present threat of doing so enabled it to negotiate deep price cuts with drug manufacturers 60 and consequently provide anti-retroviral treatment to all who needed it. This action was fairly typical of US policy at the time: it had threatened unilateral action against p. In March , a group of 39 pharmaceutical companies challenged the constitutionality of South African legislation, which was designed to facilitate access to cheaper drugs, in the High Court in Pretoria in March , claiming that it breached their rights to property, namely their IP.

No decision was ever made. The companies dropped the suit in April after a wave of global outrage. In , developing States conducted a campaign within the WTO to clarify the scope of the compulsory licensing provisions.

Intellectual Property and Economic Development in Sub‐Saharan Africa

As noted, the South African pharmaceutical case collapsed. Furthermore, the US effectively backed away from its case against Brazil in A few weeks after the September 11 terrorist attacks, a number of anthrax cases appeared in the US. In late October, the German company Bayer was forced to sell its anti-anthrax drug Cipro to both the US and Canada at a heavily discounted price after both States had threatened to issue compulsory licences. Such actions were astonishingly hypocritical: the US had suffered three deaths and Canada none, which hardly compared to the various medical emergencies, especially the alarming rates of HIV, being experienced in developing States.

Finally, LDCs were given until before they are required to respect pharmaceutical patents.

Assistance to Developing Countries

The Doha Declaration clarified that the compulsory licensing provisions of TRIPS may be used to facilitate access to medicines to combat public health emergencies. By the end of , 52 developing States had issued post-Doha Declaration compulsory licences, indicating that the Declaration has had the desired effect of prompting needy States to make use of the Article 31 exception.

Another breakthrough arose within the WTO in This provision was problematic, as many developing States lack the capacity to manufacture generic pharmaceutical products, and therefore must import generics from countries which have such a capacity. Safeguards must be implemented to ensure that the compulsory licensed generics are not diverted to another market.

The waiver facilitates exports of generic drugs to LDCs and other vulnerable developing States to allow them to benefit from the compulsory licensing provisions. There are a number of possible explanations for this lack of use of the waiver. First, some developing States with manufacturing capacity as opposed to LDCs who generally lack such capacity only had to fully comply with TRIPS with regard to pharmaceutical patents from 1 January Up until that time, such States could authorize generic production of patented goods, and supply such generics to other States: India in particular was a major supplier to the world of such generics.

Therefore, the deadline delayed the need for some States to use the waiver provisions. Furthermore, the Doha Declaration and the waiver are likely to have prompted some pharmaceutical corporations, who feel threatened by compulsory licensing schemes, to make their products available to some developing States on a cheap or even cost-free basis.

Indeed, numerous corporations have adopted such a strategy, 82 though these efforts are generally confined to drugs for AIDS, malaria, and a few other drugs, rather than the wide range of treatable killer diseases. Finally, Howse and Teitel bemoan the excessive formalities, suggesting that the requirements are too costly for generic manufacturers. Instead he stressed that States had to take advantage of available TRIPS flexibilities if they are unable to independently facilitate access to patented goods.

That is, States had to make full use of compulsory licensing, importation of generic goods under the waiver, parallel importation, the limited exceptions permitted under Article 30 TRIPS, and remaining transition periods. His comments on these issues are analysed below. Furthermore, while Article 27 of TRIPS provides that patents must be available for new inventions capable of industrial application, it does not specify particular criteria for patentability.

WTO TRIPS amendment: Pascal Lamy

Grover also noted that TRIPS did not prohibit States from adopting laws which allowed for the opposing and revocation of patents in appropriate circumstances. India and Thailand both provide for oppositions, and civil society groups have been successful in both States in staving off patents for certain anti-HIV drugs. On compulsory licensing, the language of the Doha Declaration arguably restricts compulsory licensing in respect of health crises beyond epidemics. Does its wording recognize the right to issue compulsory licences to facilitate access to drugs for sufferers of cancer, diabetes, heart disease, or other lethal non-communicable diseases?

The US, for example, has behaved as if it does not, by threatening trade sanctions against Thailand in for its proposal to issue compulsory licences for medication for heart disease and cancer. However, it seems clear that the Doha Declaration is meant to list examples of relevant diseases, and is not an exhaustive list thereof: it does not limit its application to specific diseases. Furthermore, Grover calls upon States to streamline their domestic legal provisions regarding compulsory licensing, which are often cumbersome.

Indeed, red tape requirements are probably a key reason for the lacklustre response thus far to the waiver. The waiver stipulates that exporting and importing States must notify the TRIPS council of the types and quantities of drugs involved in use of its scheme. The notification requirements needlessly expose vulnerable States to possible political pressure by alerting the world of their intentions. Grover recommends that States adopt laws which give them the greatest flexibility to use parallel importation as a mechanism to bring down prices.

South Africa, Kenya, and Honduras are examples of States which have adopted the principle of international exhaustion. Article 40 of TRIPS recognizes that IP rights-holders can abuse their position and unduly restrict competition by, for example, imposing unreasonable conditions of licence for use. Grover cites with approval the practice of the South African Competition Commission, which has held that the failure by a pharmaceutical company to grant a licence to a generics manufacturer was an abuse of its dominant position. Such measures could be repeated across the world to ease anti-competitive practices in the pharmaceutical industry.

The common failure to do so amounts to a violation of the right to health by the States concerned. Similarly, the placement of pressure on weaker States by stronger States to forego such flexibilities constitutes an extraterritorial breach of human rights obligations by the latter States. Thailand has been pressured by both the US and the p.

Therefore, despite the Doha Declaration and the waiver, pressure has been applied by the North and pharmaceutical companies, somewhat unsuccessfully, to attempt to dissuade States with emerging economies, such as Thailand, from making use of compulsory licensing. In contrast, such pressure has not been overtly applied to LDCs, such as the many from sub-Saharan Africa which have issued compulsory licences.


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More importantly, LDCs lack the capacity to manufacture their own generics so they must import them. If pressure is successfully applied to prevent States such as Thailand, India, and Brazil from manufacturing generics, import-dependent LDCs will lack suppliers outside the rubric of the scheme outlined in the waiver. As discussed above, that scheme is highly problematic.

The diluting of IP rights via the extensive use of flexibilities, as advocated by Special Rapporteur Anand Grover, would presumably diminish the benefits of IP. Therefore, it is now necessary to revisit the justifications for IP. While patented goods are expensive in developed States, those States generally have the capacity to provide many patented medicines to those who need them.

Therefore, the real question is whether the adoption of flexibilities by developing States will have consequences for future innovation. For example, Africa constituted only 1. In response, one may note that parallel importation must have been a similar threat prior to TRIPS, yet the pharmaceutical industry managed to consistently reap exceptional profits.

Secondly, Northern States are free under TRIPS and should be encouraged to pass laws that prevent parallel importation, if such measures are needed to preserve the feasibility of low prices in the developing world. Of course, Northern consumers might object to paying more than the developing world for the same pharmaceutical products. However, the level of need in the developing world regarding access to essential drugs is so comparatively great as to justify differential pricing or patent systems and the effective subsidization of third world drug prices by Northern governments.

Insistence on the payment of full price simply shrinks that market even more. As noted above, there is an economic argument that developing States ultimately benefit from IP laws through increased domestic innovation and technology transfer.

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The evidence suggests that the wealthy OECD nations are little inclined to promote the development of world-class pharmaceutical producers in poor countries, which might eventually compete with the existing originators. Then again, it is questionable the extent to which such companies can prevent their technology from ultimately being exploited by these recipient countries for their own benefit. Unfortunately, that strategy p. Of course, most developing States lack the capacities of India and China. They have not yet reached a point where the increased costs generated by TRIPS and IP protection in general are outweighed by innovation benefits.

At this point, it is worth noting briefly another human rights and development problem generated by IP laws. Copyright laws obstruct access to educational materials by raising their price. They paid out per cent more for 5 per cent fewer journals. I will not embark upon a thorough examination of the potential clash between the right to education and TRIPS. LDCs are a long way from achieving any benefits from IP. Furthermore, it seems doubtful that that extension of time will be enough to permit LDCs to attain a position where IP laws are at all beneficial to them: further extensions will almost inevitably be needed.

However, even that deadline is beginning to loom large as one which will need extending. The most obvious argument against pharmaceutical patents is that they artificially raise prices and therefore restrict access to a product, which can be crucial for the enjoyment of rights to life and health. The following commentary focuses on other arguments against current levels of patent protection in the pharmaceutical industry.

Cooperation with other intergovernmental organizations

First, it is arguable that the pharmaceutical industry is unduly exploiting its patent monopolies, given the consistently massive level of profits in the industry. Second, concerns may be raised about the type of innovation currently occurring in the pharmaceutical industry. The pharmaceutical industry has consistently, for many decades, been an extraordinarily profitable sector. Finally, the differences in cost between patented drugs and generic competition are enormous. Serious questions may also be raised regarding the current level of innovation in the pharmaceutical industry.

Finally, the incentives prompted by patent protection can create problems regarding the creation of needed drugs. These are distressing conditions but they are rarely life-threatening.

Intellectual Property and Public Health in the Developing World

Such a company would also benefit from the boost to its reputation. Given these issues of excessive profit and innovation deficit, perhaps all States, including developed States, should control health budgets, and thus increase their p.


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  • Reduction of patent rights or the imposition of price caps would of course reduce profits. Perhaps therefore, current government action in developed States which facilitates patents and high prices within their own territories is justifiable in international human rights law as a necessary means of ensuring ongoing innovation in the pharmaceutical industry. In this regard however, it is worth noting that the biggest purchasers of patented prescription drugs are government healthcare programmes in the developed world.

    Given the high percentage of government custom in the pharmaceutical industry, it seems that there is scope for interventionist public sector solutions to the problem of high pharmaceutical costs.