Reproduced with permission from WTO Reporter, "Rewriting TRIPS Could Hurt Research, Pharmaceutical Industry Strongly Warns WTO" (Sept. 20, 2001). Copyright 2001 by The Bureau of National Affairs, Inc. (800-372-1033)

GENEVA--Representatives from the pharmaceutical industry issued a strong warning Sept. 19 against attempts by developing countries to secure a political statement at the World Trade Organization's ministerial conference in Doha, Qatar, next November, which could lead to a reinterpretation or rewriting of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The representatives said that any attempt to revisit the TRIPS Agreement would send the wrong signal to the research-based industry at a time when the number of anti-AIDS drugs in the testing pipeline is on the decline. Critics of TRIPS have charged that the patent protection afforded by the agreement is hindering access to essential medicines such as AIDS treatments in the developing world.

"We think that any weakening [of TRIPS] would be disastrous for continued investment in research," declared Rolf Krebs, chairman of the board with the German drugmaker Boehringer Ingelheim, which produces the anti-AIDS transmission drug Nevirapine.

Harvey Bale, director-general of the International Federation of Pharmaceutical Manufacturers Association (IFPMA), said that drug companies "are not being helped by debates on patents in making decisions on whether to enter into AIDS research."

"We want to see TRIPS maintained so that industry can keep up the pace of innovation," Bale added. "Investment decisions do depend on the details. Even a political statement can have consequences on these decisions."

The industry representatives spoke as the WTO's TRIPS Council was meeting in a special session to discuss access to essential medicines. More than a dozen developing countries along with the African Group of WTO members put forward a proposal at the meeting calling for a ministerial declaration at Doha on the TRIPS Agreement and public health.

The draft declaration put forward by the developing countries states that nothing in TRIPS prevents members from taking measures to protect public health and that members retain the right to establish their own policies and rules on the exhaustion of intellectual property rights. Members should also have the right to authorize the production and export of medicines by persons other than holders of the patent on those medicines to address public health needs in importing members.

The developing countries also want further interpretation of TRIPS provisions for the issuing of compulsory licenses, allowing the production of a patented good without the permission of the patent right holder. This would include the right to issue compulsory licenses in cases of national emergency or "extreme urgency" without prior efforts to negotiate with the patent holder, and the right of a WTO member government to give effect to a compulsory license issued by another member.

In addition, the draft declaration calls on members to "exercise utmost restraint" in initiating WTO dispute settlement proceedings concerning measures implemented by developing countries to protect and promote public health.

The United States, Japan, Canada, Switzerland, and Australia put forward their own proposal Sept. 19 for a ministerial declaration on access to medicines for HIV/AIDS and other pandemics. The alternative draft reaffirms the "appropriateness of Members using the flexibility afforded by the (TRIPS) Agreement to ensure that medicines for treatment of HIV/AIDS and other pandemics are available to their citizens who need them" but adds that "strong, effective and balanced protection for intellectual property is a necessary incentive for research and development of life-saving drugs..."

Shannon Herzfeld, senior vice president with the Pharmaceutical Research and Manufacturers of America (PhRMA), said the attempt to create causality between the public health problems caused by developing countries and intellectual property protection "is a weak link at least, and in fact in most areas is a false link."

"If we thought that changing a word here, changing a word there [in TRIPS] would save lives, we would do it in a heartbeat," Herzfeld declared. "But it won't ... it misses the underlying problem by a mile."

The issue of affordable medicines and intellectual property protection came to the forefront after 39 pharmaceutical companies sued the South African government for adopting provisions under its 1997 Medicines Act, allowing imports of patented medicines sold cheaper abroad. The companies claimed these parallel importing provisions undermined their intellectual property rights, but the South African government insisted that parallel importing is permitted under TRIPS.

The pharmaceutical companies dropped their suit on April 19 after coming under intensive criticism from groups that accused the firms of hindering South Africa's efforts to combat the AIDS epidemic that has swept the country.

The issue also emerged in a WTO dispute between Brazil and the United States over Article 68 of Brazil's 1996 industrial property law, which requires patent holders to "work" their patents locally within three years of the patent's being granted or risk losing protection. The United States said the local working provisions violated TRIPS rules, but the Brazilian government successfully mobilized public opinion against the U.S. action on the grounds that it would undermine its successful program of offering free treatment to those affected by the HIV/AIDS virus.

The United States hotly denied that the complaint had anything to do with Brazil's AIDS program, but in June, Washington agreed to drop its WTO complaint in exchange for the two sides' handling the dispute through a newly created consultative mechanism. Brazil has since become one of the leading advocates for putting the access to essential medicines issue on the agenda of the Doha meeting.

IFPMA noted in a statement made available Sept. 19 that there has been a 30 percent decline in the number of anti-retroviral drug compounds in preclinical and clinical development since 1998, a period that corresponds with "growing attacks on intellectual property rights linked to AIDS medicines." Corresponding data for other anti-virals in development show no such decline and in fact are increasing, the organization added.

"One can only speculate at this point about the relative importance of the cause of this decline," IFPMA said. "However, recently several responsible AIDS activists have become concerned that the attacks against the industry--including the intellectual property foundation of its drug development investments--threaten to discourage new investments by some companies in new AIDS treatments. Whether or not the changes shown fully or only partially reflect the effect of attacks against the intellectual property status of AIDS compounds, there must be concern if this trend were to accelerate in the future ."

The drug industry has long argued that the overwhelming majority of patents defined by the World Health Organization as "essential" are off-patent and that the problem of ensuring access to AIDS treatments and other essential medicines is chiefly related to poor distribution networks and underfinanced health budgets in developing countries. Herzfeld pointed out that despite the South African government's rhetoric about tackling the AIDS crisis, the government spent only $3 million per year between 1996-2000 for AIDS prevention compared to the $1.3 trillion it spent annually on arms purchases over the same period.

Talk about making TRIPS more flexible to address health concerns "implies that TRIPS has rigidities which are tantamount to barriers, and that's not true."

The industry representatives said they accept that the Doha declaration will probably have to say something about access to essential medicines because of the political pressures being put on governments to address the issue. Herzfeld said the industry would be comfortable with a statement acknowledging that nothing in the TRIPS agreement should be interpreted as preventing governments from addressing public health concerns.

"Beyond that, we need to avoid the trap to say something that sounds politically good, that politically implies acceptance that intellectual property rights are a barrier to greater public health," Herzfeld added. "There are no facts to support that."

Bale said that any ministerial declaration calling for restraint in dispute settlement action related to the protection of patent rights "would send a signal that no matter what the rules are, the rules won't be enforced."

"Does a pause on dispute settlement mean that we hold our breath until the patent dies?" he asked.

By Daniel Pruzin

Copyright 2001 by The Bureau of National Affairs, Inc., Washington D.C.

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