Transcript Pharmaceutical Companies v. Poor Countries

Why is protecting pharmaceutical
patents a controversial issue in DCs?
• Poor DCs can neither produce nor afford to
buy patented drugs.
• They need generic medicines, in particular
the generic version of essential drugs.
• Otherwise, their people continue to die,
even of common diseases.
• Generic drugs = drugs sold under the name
of the chemical ingredient rather than a
trademark
Pharmaceutical Companies v. Poor
Countries
• Pharmaceutical Companies = the patent holders
• Poor Countries = Countries lacking local
pharmaceutical manufacturing capacity and
with insufficient health budget
• In theory, their interests should be complementary
rather than conflicting.
• Conflict arises as the price of medicines, even of
essential drugs, is too high, in respect of financial
capacities of poor countries.
Why is the price of medicines high?
• The price is high because of pharmaceutical
patents.
• A patent holder is free, usually for 20 years, to
decide how, when and at what price to market
its product.
• Thus, companies which are able to produce
and sell cheap generic drugs equal to
patented ones cannot do so for a long time.
What are essential drugs?
• According to the WHO definition, they are
«those drugs that satisfy the health care
needs of the majority of the population; they
should therefore be available at all times in
adequate amounts and in the appropriate
dosage forms, and at a price that individuals
and the community can afford».
(WHO, The Use of Essential Drugs, WHO Technical Report
Series 895, Geneva, 2000)
Common methods used by States to
circumvent pharmaceutical patents
• Denial of product patents
• Reference to a Bolar
exception
• Parallel importation
• Compulsory licensing
Bolar Exception
Without the permission of the patent
holder, a company is permitted to do
tests and/or trials on a patented drug
in order to gain regulatory approval
before the expiry of the patent and to
put the generic version on the market
as soon as the patent expires.
Parallel importation
Without the permission of the patent holder.
Parallel importers buy at a low price in one
country and import (it) into another country
whose home market has a higher price for
the drug. This method is based on the
exploitation of the differences in prices fixed
by a patent holder in the markets of different
States. Such differences can be considerable.
When does parallel importation
become a public issue?
If the importing State’s patent law provides
that the rights of the patent holder have
been exhausted when its patent has
been placed on the market in another
State with its consent, the patent holder
cannot exercise its rights in the importing
State to prevent parallel importation.
Compulsory Licensing
• A State public body or agency grants the
permission to copy a patented drug to meet
local needs before the patent expires and
without the consent of the patent holder.
• Sometimes, the application for such use of
a patent can bring about an acceptance by
the patent holder to grant a voluntary
licence.
The TRIPs Agreement patent
regime in brief
The Agreement provides for
- uniform patent protection for 20 years from the
filing date of a patent application, according to
minimum standards;
- process patents as well as product ones,
- different transitional periods: 1 year for ICs, 5
years for DCs and 11 years for LDCs. The latter
period has been extended until 2016, this refers
only to pharmaceutical patents.
Flexibility of the TRIPs Agreement
• The Agreement provides for some exceptions
and safeguards.
• In particular, the fact that it does not regulate
the resort to a Bolar exception or to parallel
importation implies that such practices are, in
principle, permitted.
• Art. 31 allows a WTO Member to resort to
compulsory licensing, although under strict
conditions.
Art. 31 is controversial. Why?
Because it provides that public non-commercial
use of a patent can «be authorized
predominantly for the supply of the domestic
market of the Member authorizing such use»
(Para. f), unless «such use is permitted to
remedy a practice determined after judicial or
administrative process to be anti-competitive»
(Para. k).
What does Art. 31 (f) mean in
practice?
States which are specialized in the generic
production of some essential drugs cannot
grant c.l. to export them to poor countries.
LDCs cannot grant compulsory licensing as they
lack local pharmaceutical manufacturing
capacity.
Conflict of interests = the WTO trading system
does not seem to contribute to humanitarian
and development goals.
The 2005 Amendment to Art. 31 (f)
In brief, the new text of Art. 31 (f) provides that
«… the obligations of an exporting Member
under Art. 31 (f) shall not apply with respect
to the grant by it of a compulsory licence to
the extent necessary for the purposes of
production of a pharmaceutical product(s)
and its export to an eligible importing
Member(s) …».
Limits of the Amendment
• It applies apparently to any «pharmaceutical product»,
but this is not true. It refers to «the public health
problems» which are recognized in Para. 1 of the 2001
Doha Declaration on the TRIPs Agreement and Public
Health, that is those associated specifically to HIV/AIDS,
malaria and TB.
• ICs have committed themselves not to act as importing
countries, while some DCs, like China, Mexico and Korea,
have stated that they would resort to the Amendment
only in case of national emergency or other possible
circumstances of extreme urgency.
The issue of the entry into force of
the Amendment
• The Amendment has to be ratified by 2/3
of the WTO Members, that is 102
Members.
• Initially, it was established that ratification
was to be achieved by 1/12/2007. In
December 2007 the deadline was
extended to 31/12/2009 and probably it
will be extended once again.
List of WTO Members that have
ratified the Amendment
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United States (17 December 2005)
Switzerland (13 September 2006)
El Salvador (19 September 2006)
Rep. of Korea (24 January 2007)
Norway (5 February 2007)
India (26 March 2007)
Philippines (30 March 2007)
Israel (10 August 2007)
Japan (31 August 2007)
Australia (12 September 2007)
Singapore (28 September 2007)
Hong Kong, China (27 November 2007)
China (28 November 2007)
European Communities (30 November 2007)
Mauritius (16 April 2008)
Egypt (18 April 2008)
Mexico (23 May 2008)
Jordan (6 August 2008)
Brazil (13 November 2008)
Morocco (2 December 2008)
Albania (28 January 2009)
Macau, China (16 June 2009)
Canada (16 June 2009)
Bahrain (4 August 2009)
Colombia (7 August 2009)
Zambia (10 August 2009)
From the list it can be noted that
• 1. So far, only 26 Members have accepted the
Amendment (only 25% of the needed 2/3).
• 2. The EC ratification also binds its 27 Member
States. Thus, the percentage that have ratified it
is not 25%, but higher about 32%.
• 3. Many poor African countries have not ratified
the Amendment yet.
• 4. ICs and DCs which have specialized in the
production of generic drugs have ratified it.
How useful is/was the Amendment?
Is it really what poor countries need?
• Probably, the fact the Amendment came
about to deal with the 3 afore-mentioned
diseases is one of the reasons why it does not
seem to be what DCs, in part. LDCs, need.
• Another reason could be the general
reluctance of States to declare their needs.
• Another reason could be that the procedural
mechanism provided for by the Amendment is
too complex.
All States should take into
consideration that
• To gain real control of diseases in poor
countries, more financial resources and
technical cooperation are necessary.
• LDCs need support not only to pay royalties,
but also to promote prevention. International
initiatives, such as the Global Fund to Fight
AIDS, malaria and TB and the PRGF, are not
being implemented to the full potential.
Is the TRIPs Agreement part of the
problem or of the solution?
• Why did ratification by industrialized WTO
Members and emerging countries, such as
Brazil and India, come so quickly? Was it
simply economic consideration on their
behalf?
• At any rate, the existence of the amendment
is still a bargaining tool for LDCs, inter alia, to
promote voluntary licensing.