International Trade Daily

Wednesday, October 24, 2001
ISSN 1533-1350
News

WTO
WTO Talks on TRIPS, Public Health
Declaration Stall Over Compromise Text

GENEVA--Efforts by members of the World Trade Organization to forge a
ministerial declaration on intellectual property and public health have
stalled after the United States and Switzerland voiced objections to a
draft text which they said could undermine the WTO's Agreement on
Trade-Related Aspects of Intellectual Property Rights.
Informal discussions on a first draft declaration circulated by WTO General
Council chairman Stuart Harbinson Oct. 21 revealed continued sharp
differences between developed and developing countries as to whether TRIPS
needs to be reinterpreted or clarified in order to give governments greater
flexibility under the WTO agreement to address public health crises such as
the HIV/AIDS crisis pandemic.

Some officials described the TRIPS/public health debate as one of the most
important and difficult issues facing Geneva negotiators as they prepare
for the WTO's fourth ministerial conference in Doha, Qatar on Nov. 9-13,
where the declaration will be submitted for approval.

"The situation now is not so good," said one official closely involved in
the talks. "Right now, we're at an impasse."

"The situation is very difficult," added Federico Cuello Camilo, the
Dominican Republic's ambassador to the WTO. "There's strong resistance from
two countries, with the tacit support of a few other countries."

Cuello said the ongoing anthrax scare highlighted the need for greater
flexibility on the interpretation of TRIPS rules.

The Canadian government announced Oct. 18 it would ignore the patent held
by Bayer AG on Cipro, the anthrax treatment, and order generic versions to
ensure an adequate supply of the medicine. Ottawa later changed its mind
and said it would continue to rely on Bayer for the supply of Cipro and
only resort to generics if the company could not meet demand for=20 the
medicine.

In the United States, Sen. Charles Schumer (D-New York) called on the
government Oct. 16 to allow the generic production of Cipro in order to
ensure adequate supply. But Health and Human Services Secretary Tommy G.
Thompson announced Oct. 22 that his department has no current plans to
override Bayer's patent on Cipro at this time.

"We only want to do what the United States is already doing, and what
Canada is already doing," Cuello declared.

Conscious of Anthrax

"It's not there in the (WTO) discussions," said a Brazilian official in
reference to the anthrax scare and its impact on the TRIPS/public health
debate. "But everyone is conscious of it. It adds a lot of weight to our
arguments."
The Harbinson text aims to bridge the differences between=20 developing
countries led by Brazil, India and South Africa, and countries such as the
United States and Switzerland which are home to major global pharmaceutical
firms.

The former camp wants a declaration that would make it easier for poorer
countries to overcome intellectual property barriers that may inhibit
affordable access to HIV/AIDS treatments and essential medicines, including
a broader interpretation of TRIPS rules regarding parallel=20 importing
(importing a patented drug from another country where it is sold cheaper)
and the use of compulsory licenses (allowing the production of a patented
good without the permission of the patent right holder).

The demand for a declaration emerged from the public outcry over court
proceedings initiated in South Africa by 39 drug firms who sued the
government there over a law allowing patented medicine sold cheaper abroad
to be imported into South Africa without the right holder's permission (the
suit was later dropped) as well as a U.S. complaint filed with the WTO
against Brazilian patent legislation which Brazil claimed would undermine
its policy of offering cheap medicines to those infected with the HIV/AIDS
virus (the proceedings were also suspended).

Opposition From U.S., Switzerland

The United States and Switzerland oppose a declaration on the grounds that
patents are not a barrier preventing access to essential medicines. The two
countries however say they are willing to go along with a statement
affirming that TRIPS already contains provisions giving governments the
flexibility to ensure access to medicines needed to tackle HIV/AIDS and
other pandemics.
Highlighting the sharp differences on the issue, the Harbinson text left
several key elements of the draft declaration in brackets. Even the title
of the declaration was left in brackets as members feuded whether the focus
should be on access to medicines or public health in general.

Most of the discussion focused on the fourth paragraph of the Harbinson
text, which reads as follows: "We emphasize that the TRIPS Agreement
permits governments to take measures to [protect public health][to secure
access to medicines at affordable prices]. In this connection, we reaffirm
the right of WTO Members to use, to the full, the provisions in the TRIPS
Agreement which provides flexibility for this purpose, as an integral part
of our commitment to the TRIPS Agreement as a whole."

In informal discussions which took place between Oct. 21-23, the United
States and Switzerland warned that the emphasis of the declaration should
be on access to affordable medicines and that any attempt to extend the
language to public health in general could be used to justify broad
exemptions from TRIPS rules beyond what is needed to address health
emergencies.

Trade officials involved in the talks said that the Swiss attempted to put
forward compromise language reaffirming the commitment of members to the
TRIPS accord while stating the right to use all provisions under=20 the
agreement to protect public health, but the text was refused by the United
States. Developing countries also said the text did not make sense because
it seemed to suggest that the full provisions of TRIPS could not be used
outside the context of public health.

EU Compromise

The EU's ambassador to the WTO Carlo Trojan also put forward compromise
language stating that nothing in TRIPS shall be interpreted in a way that
prevents WTO members from pursuing and addressing public health objectives,
the officials said. But Trojan later withdrew the proposal without
explanation.
The European Commission has come under criticism from some of its member
states and its pharmaceutical industry for taking a position in the
TRIPS/public health debate without first seeking guidance from member
states. The Commission has staked out a middle position, arguing that TRIPS
offers enough flexibility allowing governments to pursue their public
health objectives but adding it is prepared to discuss possible
"clarifications" of certain provisions under the agreement.

Critics in the pharmaceutical industry charge that the Commission is trying
to curry favor with developing countries in order to win their support for
issues such as the environment, investment and competition, and protection
of geographical indications for foods which the EU wants to put on the
agenda of a new trade round that the WTO hopes to launch in Doha.

The United States has shown some flexibility on other issues covered in the
TRIPS/public health debate, including longer transition periods for poorer
countries to ensure compliance with their TRIPS obligations and a possible
moratorium on WTO dispute settlement proceedings involving allegations of
TRIPS violations.

Trade officials said the United States has proposed allowing longer
transition periods for WTO members classified as least developed countries
to bring their laws in line with TRIPS requirements and imposing a
moratorium on WTO settlement of TRIPS disputes involving=20 sub-Saharan
African countries and measures taken by them to address the AIDS pandemic.

But developing country critics say the former proposal is meaningless in
practice as Article 66.1 of TRIPS gives these countries an automatic right
to seek longer transition periods as long as their request is "duly
motivated." Least developed countries in any case have until Jan. 1, 2006,
to ensure compliance with TRIPS.

By Daniel Pruzin
Copyright =A9 2001 by The Bureau of National Affairs, Inc., Washington D.C.
***********************

International Trade Daily

Wednesday, October 24, 2001
ISSN 1533-1350
News

WTO
WTO Should Address Tariff Issues,
Not Patents, Pharmaceutical Group Says

The World Trade Organization should address factors that restrict
developing countries' access to critical medicines, such as high tariffs on
pharmaceuticals, rather than focusing on patents and intellectual property
rights, the Pharmaceutical Research and Manufacturers of America (PhRMA)
said Oct. 23.
Shannon Herzfeld, senior vice president international for PhRMA, told
reporters at a briefing sponsored by the pharmaceutical lobbying group that
patents "aren't the problem" for developing countries seeking access to
HIV/AIDS and other medicines.

Instead, she cited corruption and flawed government procurement processes,
in addition to tariffs, as barriers the WTO could help eliminate. Broader
problems resulting from underdeveloped health care systems and a lack of
resources were also significant factors, she said.

The WTO is discussing the effect of its Trade-Related Aspects of
Intellectual Property Rights (TRIPs) agreement on developing countries'
ability to promote public health. The issue has emerged as a major bone of
contention in negotiations to launch a new round of trade talks under the
auspices of the WTO.

Negotiations continued in Geneva Oct. 21-23 on a draft ministerial
declaration on intellectual property rights (IPR) and public health. The
draft text, separate from the overall ministerial declaration that is also
currently being negotiated, is to be submitted for approval at the WTO's
fourth ministerial conference scheduled for Nov. 9-13 in Doha, Qatar.
However, agreement over the proposed text from WTO General Council Stuart
Harbinson has proven elusive.

Herzfeld noted that PhRMA, which represents pharmaceutical companies that
account for 95 percent of the brand-name drug sales in the United States,
was "disappointed" that TRIPs and public health were to be addressed in a
separate declaration. She said PhRMA was concerned that removing it from
the broader ministerial declaration "elevated its status."

'A Corruption-Free Zone'

Instead of focusing solely on TRIPs and patents, Herzfeld said, the WTO
should discuss high pharmaceutical tariffs, bribery and corruption, and
flawed government procurement processes in its next trade round. PhRMA has
communicated its position to the Office of the U.S. Trade Representative,
and PhRMA's "European colleagues" have also done so with the EU, she said.
Tariffs levied by developing countries on pharmaceutical imports average
around 20 percent to 30 percent, and in India reach 65 percent, Herzfeld
said, which can significantly "bump up" the street price of medicine.

Meanwhile, bribery and corruption can also act as barriers to access,
whether due to the manufacture of counterfeit drugs, or the diversion of
medicine to black markets, or bribes to government officials that raise the
cost of medicines.

"Public health should be a bribery and corruption-free zone," Herzfeld
said. This can be achieved partly through making it a medicinal access
issue, she added.

Related to corruption is the issue of government procurement, since many
national governments are major, if not the sole, purchasers of critical
medicines in their countries, Herzfeld noted. She said that the WTO's rules
on government procurement, which require greater transparency and other
disciplines, are not currently applied to pharmaceuticals.

Patents Not a Barrier, JAMA Says

PhRMA also is highlighting a report from the Oct. 17 issue of the Journal
of the American Medical Association (JAMA) that Herzfeld said showed "no
correlation" between access to critical medicines and a country's patent
laws. The report also demonstrated that most "anti-retroviral" or anti-HIV
drugs are not subject to patents in many sub-Saharan African nations, a
PhRMA fact sheet argued.
Yet "a mythology" has developed that portrays patents as a primary barrier
to medicines and to improved public health in developing countries,
Herzfeld said.

"I know of no instance where a patient has not received their medicine
because of intellectual property rights," she added.

However, a coalition of consumer groups, headed by the Consumer Project on
Technology (CPT), an organization founded by Ralph Nader in 1995, disputed
the JAMA article's findings in an Oct. 16 report.

Among other things, the CPT report argues that many of the cheapest and
most effective drug combinations, or "cocktails," are blocked by patent
protections on at least one of the drugs in most of the largest countries
in sub-Saharan Africa.

In addition, the CPT argues that lower prices for HIV/AIDS drugs currently
available in Africa are "due to creditable threats of generic entry" from
countries such as India, which does not issue patents for pharmaceuticals.

However, the CPT report argues that "[t]his will change" because of the
WTO, which will require "nearly all African countries to adopt 20-year
patents on medicines."

"There is no benefit to understating the significance of changes in trade
rules," the CPT report says.

'The Hard Things'

However, Herzfeld argued that disputes over IPR trade rules are a
"distraction" that "diverts ... important collective resources and energies
away from the hard task ahead of us," which she identified as upgrading the
health systems in developing countries.
"To the extent that we all get a false sense of progress because people in
Geneva are tinkering with words on the TRIPs agreement diverts us from
doing the hard things," she said.

By Chris Rugaber
Copyright =A9 2001 by The Bureau of National Affairs, Inc., Washington D.C.

Richard Elliott
Director, Policy & Research / Directeur, politiques et=20 recherche
Canadian HIV/AIDS Legal Network / R=E9seau juridique canadien=20 VIH/sida
890 Yonge Street, Suite 700, Toronto, Canada M4W 3P4
Tel : +1 (416) 595-1666 = Fax +1 (416) 595-0094
E-mail: relliott@aidslaw.ca Web: www.aidslaw.ca

The Canadian HIV/AIDS Legal Network is a partner organisation of=20 the
AIDS Law Project of South Africa. -- Le R=E9seau juridique canadien VIH/sida
est un organisme partenaire du AIDS Law Project de l'Afrique du Sud.

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