Unofficial EU Response to TACD Recommendations (February 2000) on Intellectual property rights and Access to Medicines


Transatlantic Consumer Dialogue (TACD) on 10-12 February 2000
Recommendations on Intellectual property rights and Access to Medicines


Access to medicines in developing countries (Annex I)

The TACD recommends a set of measures to ensure access to medicines in developing countries. In particular, in relation to intellectual property rights, unlimited production for export under compulsory licenses and no "TRIPs plus" pressure from developed countries are mentioned as key measures to ensure access to medicines in developing countries. These proposals should be seen in the light of the recent public debate on intellectual property rights' influence on Access to essential Medicines.

It is true that due to the lack of purchasing power, developing countries face severe difficulties in providing their population with sufficient healthcare and the need for basic drugs. This situation is caused by many factors, such as the lack of infrastructure, finance, education, knowledge and production capacity. However, it is regarded as being more of a developing aid challenge than an intellectual property right issue. Therefore, this issue should be addressed from a broad perspective, necessitating a close look at the whole array of aspects that effectively impact on improved access to drugs.

Intellectual property rights, and in particular patents, have been referred to because of their role to ensure future investment and development of new pharmaceuticals. The TACD stresses that patents have a negative impact on Access to Medicines and that multinational pharmaceutical companies should not be allowed to use the patent system to block access to essential medicines. The TACD also stresses that enhanced trade pressure from both the US and the EU has forced developing countries not to implement "fast tract compulsory licences" in developing countries. In this specific case, South Africa, the Dominican Republic and Thailand are mentioned. The US and the EU are urged to stop this pressure for "TRIPs plus" implementation of developing countries.

This also leads to the question whether intellectual property rights and compulsory licenses are the right instruments to achieve the goals pursued by the TACD.


The effects of using compulsory licenses appear to be limited because most developing countries and least-developed countries, in particular in Africa, do not yet have patent legislation in place and therefore copy production can, in principle, take place. Those countries that do not have a production capacity can import, if they have sufficient purchasing power.

Furthermore, some HIV/AIDs products exist on the market, including in countries where they are not covered by a patent. Consequently, legal parallel trade is allowed enabling developing countries to benefit from differential pricing in different markets. Therefore, pricing policies and the possibility of differential pricing for the more expensive drugs need to be examined closely. However, it should be noted that the problem of access in the developing world is not going to be solved by simply making products available at a cheap price. There is a risk that countries become flooded with drugs which patients cannot use or even worse that counterfeit products are entering the market, causing great safety risks for the consumers.

It is also worth noting that least developed countries do not need to implement the TRIPs provisions before 1 January 2006 and they may ask for an even longer transition period. Therefore, most drugs on the market in these countries will stay out of patent protection for many years to come. It can also be argued that most R&D companies do not apply for patent protection of their products in markets without any market potential Production or importation can therefore start, upon mere approval by the local authorities.

Finally, Article 31 of TRIPs allows fur the issuing of compulsory licences based on certain criteria. The EU has no intention of re-negotiating this article, which may be a helpful legal instrument in specific cases. Also, Article 5 of the Paris Convention for the Protection of Industrial Property sets some clear limitations for the granting of compulsory licenses. Article 27.1 of TRIPs, which is applicable to the exceptions in Articles 30 and 31 of TRIPs, also makes it clear that compulsory licenses must be issued on a non-discriminatory basis.

In relation to the concrete cases mentioned by the TACD, the latter argues that the EU and the US have forced several countries to implement "TRIPs plus" legislation. This allegation is false, at least as far as the EU is concerned. The EU has urged South Africa to comply with the carefully negotiated wording of Article 31 of TRIPs. The EU has not been involved in the Dominican Republic case. However, knowing that the patent legislation of the Dominican Republic is not yet in place, there appears to be no reason to issue a compulsory licence at this point in time. In the Thai case ( ddi) the product subject matter is not under a patent and therefore there is no purpose in issuing a compulsory licence.

Regarding the TACD's recommendation on production for export during the patent term, the pending WTO Dispute Settlement case (WT/DS/114), EU against Canada, the EU has argued that such production is not in compliance with Article 28 of TRIPs and cannot be allowed under Article 30 of TRIPs. Therefore, the EU does not support any such recommendation. However, it must also be considered whether the TACD basic assumption regarding this point is valid. Will extra production capacity for export ensure access to medicines? It has just been mentioned e.g. that in most African countries there are no obstacles to free import of HIV/AIDs drugs (because there are no patents). In theory, and if the TACD assumption is valid, there should be plenty of drugs available in developing countries not having patent protection. However, that is often not the case, because firstly developing countries' governments do not have the purchasing power to buy original products nor generic products and, secondly, because they are often not capable of providing the additional healthcare measures to support the safe and efficient consumption of drugs. Therefore, enhanced production for export appears to make no difference for the developing countries.

The situation is different if a patent exists. However, it does not change the fact that a given Government needs the money and/or the production capacity and the infrastructure to make use of the pharmaceutical product in question. Very often, it turns out that the original developer can deliver the product relatively cheaply compared to generic competitors who are not willing to enter into non-profit markets. The same applies when the local authorities (e.g. in Thailand) want to start their own production lines. In cases where the generic producers would be willing to start production within a developing country based on a compulsory licence, it should be done with the respect of the criteria of Article 31 of TRIPs. The EU recognises the flexibility built-in in Article 31 of TRIPs. However, the issuing of compulsory licences is unlikely to offer an effective solution to access to medicines in developing countries. Other measures must be considered. In this context, it is important to involve all stakeholders dealing with the development, production, approval and distribution of essential medicines.

It is also important not to underestimate the effect a reduction of intellectual property rights' protection may have on the development of future pharmaceutical products -products which are relevant for consumers in both developed and developing countries. The availability in developing countries of intellectual property rights' is also crucial for the industry's willingness to invest in developing and least-developed countries.

The R&D based pharmaceutical industry is carrying out approx. 90% of all R&D in new pharmaceuticals. In this respect, R&D covers not only the basic research but also the development, approval procedures and product entrance to the market. Public research institutions very often participate in the basic research and this may create some excellent opportunities for public/private co-operation projects also between developing countries and the R&D based industry. In Africa several such projects already exist. The industry should be urged to engage in such co-operation and to spend R&D resources on diseases specifically relevant for developing countries. The industry should also be urged to start research in diseases relevant for the developing world (Malaria, TB, HIV/AIDs and a wide range of orphan diseases). However, in order to do so, it is evident that the R&D based industry needs to have guarantees of adequate levels of intellectual property rights' protection. Without such protection, it is not possible to share the benefits derived from public/private research co- operation or to finance non-profit research initiatives (e.g. such as the WHO Malaria Venture).

The role of the generic industry should also be examined further. It appears that there may be some significant leverage for the generic industry to sell and produce products for consumption in developing countries without charging prices similar to those charged by the original producers. The generic industry is not burdened with extensive R&D costs and thus the prices of the final product could be lower than for the original products. It should also be examined why the generic industry has not entered into markets where there is no patent protection.

Draft Statement on Earl Work. Pharmaceutical Patents (see Annex II)

The TACD recommends that developing countries provide an early working provision of patented pharmaceutical products in their national patent legislation. The TACD refers to the on-going WTO Dispute (WTO/DS 114) between the EU and Canada giving the same arguments as Canada justifying the early working of patents to ensure Access to essential Medicines.

Due to the on-going WTO Dispute, the EU should stress that it does not consider that the proposed early working provision of patented pharmaceuticals is consistent with Articles 27.1, 28 and 33 of the TR1Ps Agreement.


The services of the Commission should take this line at the up-coming TACD in Washington on l0- 12 February 2000 and are prepared to revert to this issue as soon as the Dispute between the EU and Canada will have been definitively settled.