IP Disputes in Medicine

Tuesday, November 14, 2006

CPTech statement on Doha plus five

by James Packard Love

This is the statement presented today on behalf of CPTech by Thirukumaran Balasubramaniam, at a meeting in Geneva hosted by MSF to evaluate the first five years of hte Doha Declaration.

Doha + Five
The Doha Declaration on the TRIPS Agreement and Public Health, after five years

Consumer Project on Technology
November 14, 2006

I. The 2001 Doha negotiation

The World Trade Organization (WTO) adopted the Doha Declaration on the TRIPS Agreement and Public Health on November 14, 2001.

It most importantly stated, “the TRIPS Agreement …. can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all.1

The Declaration was relatively short -- 553 words for the English version, split into seven paragraphs. It was both a political statement, supporting access to medicine for all, and a decision that addressed substantive issues in furtherance of that goal. The specifics were at the end of the Declaration.

Paragraph 5 set out "clarifications" regarding the flexibilities of the TRIPS in the areas of compulsory licensing and parallel trade, eliminating doubts about the freedom of countries to choose the grounds for compulsory licenses. The compulsory licensing fast-tract procedures for emergencies were plainly extended to include cases involving short or long term public health crisis. The WTO would only regulate parallel trade in the area of most favoured nation (MFN) status, or national treatment.

Paragraph 6, the weakest part of the Declaration, called upon the WTO's Council for TRIPS to find an expeditious "solution" to the problems facing countries with "insufficient or no manufacturing capacities in the pharmaceutical sector," when seeking to make effective use of compulsory licensing under TRIPS Agreement. This issue, which was often poorly understood and reported, would later become the subject of prolonged and sometimes treacherous negotiations, which in the end, provided a controversial and disappointing outcome.

Paragraph 7 of the Declaration gave least developing countries the right to eliminate pharmaceutical product patents or protections of pharmaceutical test data at least until 2016.

By singling out public health, and in particular pharmaceuticals, from other trade related issues, the Doha Declaration recognized that medicines are not just another commodity and may be differentiated from other inventions in order to protect public health, regardless of language in Article 27 of the TRIPS, regarding discrimination by field of technology.

II. Negotiations on paragraph 6 of the Doha Declaration

The negotiation over the implementation of paragraph 6 of the Doha Declaration was a major test for the WTO, that it largely failed. As noted by many experts, the WTO decision of 30 August 2003 was protectionist (it allows countries to participate as exporters, while blocking imports), complex, and poorly designed to exploit economies of scale and other efficiencies. It could have been worst. In 2002, the WTO considered limiting the decision to only a handful of diseases -- an irrational and morally repugnant result.

The 2005 WTO decision implementing the 2003 Decision and permanently amending the TRIPS Agreement was more than 2,300 words, including 1,616 words for a new article 31bis for the TRIPS. It is further marred by a restrictive 2003 Chairman's statement of 976 words.

A much shorter and simpler outcome was possible. For example, on October 23, 2002, the European Parliament adopted Amendment 196, in an effort to update the EU Directive 2001/83/EC relating to medicinal products for human use. This Amendment sought to address the paragraph 6 solution in only 51 words:2
"Manufacturing shall be allowed if the medicinal product is intended for export to a third country that has issued a compulsory license for that product, or where a patent is not in force and if there is a request to that effect of the competent public health authorities of that country."
The shorter solution was rejected by DG-Trade and USTR for the simple reason that it would have worked. While DG-Trade and USTR had endlessly advertised to an uncritical press that they were seeking to help the poor, this was clearly not the case.

Some of the flaws in the TRIPS amendment should be highlighted. The fact that it bars imports to nearly all high income countries is absurd, given the fact that these countries have already faced a potential crisis of inadequate capacity to manufacture medicines needed for public health emergencies twice since 2001 -- once for possible treatments for biochemical attacks, and again for treatments for a possible bird flu pandemic. The protectionist nature of the "solution" of paragraph 6 was designed to ensure that Indian generic suppliers could not export medicines to high-income countries under this mechanism -- a result that undermines economies of scale for developing country (but not high income country)’s producers, and ultimately makes consumers in both high and low income countries worst off.

That said, the WTO's amendment to the TRIPS Agreement did create some new space for permitting exports of medicines, when manufactured under a compulsory license.

III. National implementation of paragraph 6 of the Doha Declaration

The response by WTO members to implement this new flexibility has been quite uneven. Among the worst approaches to implementing the new mechanism are those found in Canada and the European Union. Often overlooked, but certainly the best implementation, is the mandatory compulsory licensing for export approach adopted by India, in February 2005.3

It is ultimately too early to judge the utility of the new Article 31bis of the TRIPS Agreement. The reason that there have been few efforts to use the provision is obvious. Few important medicines are now patented in India. As a consequence, importers have not had to rely upon the new paragraph 6 mechanisms -- yet. Over time, paragraph 6 may or may not become more important, depending upon the willingness of countries to issue import licenses, and the extend to which exporting countries rely upon other exporting mechanisms, such as Articles 6, 30, 31.k and 40 of the TRIPS Agreement, Paragraph 7 of the Doha Declaration, or the ability of countries without relevant patents (including non-WTO members) to ramp up export capacity.

As India’s implementation has show, those countries that use the new paragraph 6 mechanisms to promote exports can make it nearly automatic, if they want to. Poor implementation of Article 31bis is not entirely the fault of the WTO.

For non-LDC WTO members, the leading alternative to Article 31bis, are compulsory licenses that use TRIPS Articles 31.k and 40. The use of TRIPS provisions on remedies to anticompetitive practices, which can include simple refusals to license, are objectively much better mechanisms for authorizing exports -- a fact often overlooked by technical assistance experts.

IV. National implementation of paragraph 7 of the Doha Declaration

One of the largest disappointments has been the failure of LDCs or technical assistance agencies, like the WTO, WIPO or WHO, to promote implementation of paragraph 7 of the Doha Declaration. The major benefit of this provision so far has been the decisions by donors, such as the Global Fund, to effectively ignore patents in LDCs, or to accept compulsory licenses issued under questionable procedures. This solution is unsatisfactory in the long run, however.

V. National implementation of paragraph 4 of the Doha Declaration

Since 2001, a number of developing countries have issued compulsory licenses on patents for a handful of AIDS drugs. These include South Africa (2003, as remedy to anticompetitive practices), Zambia, Zimbabwe, Ghana, Malaysia, Indonesia, and Swaziland, to name only some examples. However, countries still struggle with compulsory licensing, for a variety of reasons, including lack of experience, uncertainly over procedures and remuneration, bad national laws, fears of backlashes from investors or trading partners, or corruption.

National laws still often fail to fully exploit the flexibilities of the TRIPS Agreement. None of the UN agencies dealing with technical assistance have provided optimal models for statutes on compulsory licensing in lower income countries. The WHO is woefully under-resourced for providing technical assistance, and in several cases has pressured its own staff when they have attempted to provide public health perspectives on intellectual property right issues, leading to speculation that large pharmaceutical companies exercise undue influence at the WHO.

VI. New paradigms for implementation of paragraph 4 of the Doha Declaration

National governments, UN agencies, development experts, donors, health activists and others need to consider new mechanisms for collective management of intellectual property rights, such as regional or global pools for patents on essential medicines. These patent pools can help countries address many of the problems associated with compulsory licensing. For example, patent pools can:
  1. reduce transaction costs and develop the capacity to deal with legal, management and administrative issues associated with voluntary and non-voluntary licensing of patents,
  2. provide for greater economies of scale for generic suppliers,
  3. protect countries from political pressures, as the pool creates regional or global norms for licensing, and
  4. insure that compulsory licensing will follow best practice models on issues such as remuneration, transparency, competition (open licensing), and drug quality (licensing only to qualified suppliers).
Additional attention should be given to the proposals for new paradigms to support medical R&D, including for example the medical innovation prize fund approach (such as United States proposed bill H.R 417 from the 109th Congress), or related systems to reward positive health care outcomes for development of products that treat Type II or III diseases, and global R&D treaties -- ideas that will be will be considered by the new WHO intergovernmental working group (IGWG), which first organizes on December 4-8, 2006.

Ultimately the most important paradigm shift will be to break the link between medical R&D and drug prices. Only then can the promise of the 2001 Doha Declaration reach its potential.


1 WT/MIN(01)/DEC/2, Declaration on the TRIPS agreement and public health, 20 November 2001, Paragraph 4.

2 See 2002 Civil Society letter to Commissioner Lamy and Ambassador Zoellick on the European position: http://www.tacd.org/cgi-bin/db.cgi?config=admin/docs.cfg&id=178

3 Insertion of new section 92A to the Indian Patent Law - Compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances. "After section 92 of the principal Act, the following section shall be inserted, namely:— 92A. (1) Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India. (2) The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him. (3) The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under any other provision of this Act. Explanation.—For the purposes of this section, "pharmaceutical products" means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address public health problems and shall be inclusive of ingredients necessary for their manufacture and diagnostic kits required for their use."


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