26 February 2003

The Hon Mark Vaile MP
Minister for Trade
Parliament House
CANBERRA ACT 2600


Dear Minister:

TRIPS NEGOTIATIONS ON PHARMACEUTICALS

I would like to thank you for your most prompt replies to
our recent letters on the effects of bilateral trade on the
PBS, and on the progress of talks in Geneva on the access by
developing countries to affordable medicines under the TRIPS
measures. In your letter on the second matter, you looked
forward to the ACA and Consumers International playing a
constructive role in finding a balanced solution to the
matters arising from the Doha round. This letter is written
with such a constructive and balanced approach in mind.

As you know, negotiations in Geneva to formalise the supply
of affordable medicines to developing and least-developed
countries under the TRIPS arrangements broke down on 24
December. In terms of its potential for saving life and
reducing suffering, this is one of the most crucial
initiatives in international trade for many years, and it is
essential that the talks should resume and be successfully
concluded.

As your Department’s background document on this issue
notes, resolution of this issue was prevented by just one
country, the United States. The US Trade Representatives’
policy of limiting the scope of an agreement under TRIPS to
a narrow range of diseases is clearly unacceptable to a
number of poorer countries. At the same time, there must be
reasonable protection for the intellectual property rights
of originator companies and, above all, the potential for
cheap generic versions of patented medicines to flow back
into developed-country markets must be addressed.

We believe Australia is well placed to play a significant
role in bringing the two sides together and advocating
proposals that will solve the impasse. If our trade
officials can do this, the world will owe them a substantial
debt. With that in mind, we would like to put to you a six-
point proposal aimed at resolving this issue. We believe the
issue needs to be taken beyond the December 16 text.
Briefly, the points are these:

·  Authorisation for exports under strict conditions. This
   proposal uses the text recently adopted by the European
   Parliament as Amendment 196 to its Medicines Act. All
   countries qualify.

·  A process for exclusions for inappropriate products.
   This would be done in two ways: (a) a presumptive set of
   exclusions, and (b) a process whereby an importing country
   can be required to provide expert evidence that the imports
   address a bona fide public health problem in the importing
   country.

·  An agreement that developed economies would not
   undertake parallel trade in medicines and health technology
   products from developing countries to developed-country
   markets.

·  An agreement that developed economies would not use
   reference pricing systems that were based on prices in
   developing countries.

·  A technology transfer proposal. Developed economies
   would be required to provide non-exclusive licenses to
   developing countries for patent rights funded or owned by
   the government of the developed country.

I enclose our proposal for your consideration.

Yours sincerely

LOUISE SYLVAN
Chief Executive Officer
Australian Consumers’ Association
57 Carrington Street
MARRICKVILLE NSW 2204



                      TOWARDS A SOLUTION

  A PROPOSAL TO RESOLVE THE IMPASSE IN THE TRIPS NEGOTIATIONS
       ON PHARMACEUTICALS AND HEALTH TECHNOLOGY PRODUCTS



1. Exports to countries where manufacturing is not
economically viable

Members may permit non-patent holders to manufacture and
export a pharmaceutical or health technology product which
is protected by one or more patents, if the product is
intended for export to a third country that has issued a
compulsory licensing for that product, or where a patent is
not in force, and if there is a request for exports by the
competent public health authorities of that third country.


2. Exclusions from export authorization

(i) Presumptively excluded from the export exception in
paragraph 1 will be any product for treatment of the
following conditions:

   (a)  Weight loss, or weight gain, except for conditions
        relating to another  health care problem, such as weight
        loss associated with AIDS;

   (b)  Fertility;

   (c)  Cosmetic purposes or hair growth;

   (d)  Erectile dysfunction.

(ii) For any product not presumptively excluded from the
export exception in paragraph 1, a member which believes the
product will not be used to meet a public health need may
file an objection with the TRIPS Council. In such instance,
the importing Member must convene a panel of public health
experts to review the matter within 30 days. Submission to
the TRIPS Council of a finding by such a panel that the
imports will meet a public health need will constitute
conclusive evidence and shall be sufficient to authorize the
export.


3. Limits on parallel trade from developing countries to
developed countries

WTO members agree that pharmaceutical or health technology
products imported into a developing or least-developed
country under this system, whether manufactured and marketed
by the patent holder or not, should not subsequently be re-
imported into a developed country. This measure should be
implemented by import bans in developed countries, rather
than by export bans in developing and least-developed
countries.

WTO members agree to review the necessary amendments to the
TRIPS or other WTO agreements, and to enact this agreement
at the WTO Ministerial meeting in Cancun.


4. Developed countries not to set prices with reference to
developing country prices

Developed country members shall agree not to use prices in
developing or least developed countries as part of reference
pricing arrangements for pharmaceuticals or health
technology products. Thus, price discounts made available in
developing or least developed countries shall not affect
price structures determined by reference pricing in
developed countries.

(NB: Reference pricing is the practice of setting prices by
reference to prices available in other jurisdictions.
Reference pricing is used by many governments either for
national price controls or to establish price ranges or caps
for government purchases, particularly of pharmaceuticals.
Governments would be free to use other methods of price
controls, including systems reference pricing in developed
economies, or that use other methods of setting maximum
prices).


5. Facilitation of technology transfer

Developed country members agree to grant non-exclusive
licenses to all developing or least developed countries for
use in developing or least developed countries of all
pharmaceuticals or health technology products for which the
developed country members hold patent or other intellectual
property rights.