19 December 2002
Dear Delegate to the WTO:
We are writing to ask that the WTO delegates reject the 16
December 2002 TRIPS Council Chairman's text on the
"solution" to paragraph 6 of the Doha Declaration. We do
not make this request lightly. Like others, we expected the
WTO negotiations on paragraph 6 to signal a new sensitivity
to public health concerns, and to demonstrate that the Doha
Declaration on TRIPS and Public Health would have tangible
benefits for persons who lack access to medicines. Central
to this promise was the statement, in paragraph 4 of the
Declaration, that the TRIPS Agreement:
The solution to this problem was well known, and had been
presented to the WTO in 1999 in Seattle. Article 30 of the
TRIPS could be used to allow exports of health care
inventions allowing firms to achieve economies of scale.
The case for Article 30 was compelling. Health Care
inventions like medicines, vaccines and many medical devices
are regulated items, and patent owners can easily protect
their legitimate interests in the markets where products are
consumed. If patents exist in the market where products
are consumed, compulsory licenses would have to be obtained,
and patent owners would have all of the existing Article 31
safeguards.
In 2000, a WTO panel in the Canadian "early working" case
(WT/DS114/R)
involving pharmaceuticals, held that Canada could freely
export medicines to foreign markets for purposes of foreign
registrations, under Article 30 of the TRIPS. In the
Canadian early working case, the panel cited the Canadian
argument that:
Unfortunately, the WTO negotiations on paragraph 6 took an
entirely different direction. Shortly after the Doha
Declaration on TRIPS and Public Health was adopted, the
largest pharmaceutical companies directed an effort to
undermine the Declaration, to divide developing countries,
and to fashion new and dangerous precedents that were
designed to undermine the use of compulsory licensing, even
in cases where there were enormous social costs for not
addressing abuses of patent rights.
We have now a proposed "solution" to paragraph 6 that has
few benefits, diminishes the importance of the Doha
Declaration itself, and which will risks prejudice to other
more important strategies to address the export issue.
Stripped to its core, the 6 December 2002 Motta text would
allow countries to export some medicines to least developed
countries, and to a very small number of developing
countries that meet the severe test set out in the proposed
Annex on manufacturing capacity.
Scope of Diseases
The European Union has noted the text has "creative
ambiguities," and one of these is in area of the scope of
diseases. Paragraph 1.a says:
This "creative" effort to narrow the scope of diseases and
to raise doubts about the inclusion of vaccines, or at least
to give the United States government the space it needs to
pressure developing countries on these issues, is a
disgrace, and its only redeeming feature is that the United
States was unable to more clearly limit the scope of
diseases and technologies.
Limits on Importing Countries
The new Annex which provides the "Assessment of
Manufacturing Capacities in the Pharmaceutical Sector" will
be used to exclude many non-LDC countries. In earlier
drafts there was text to indicate that the issue of
manufacturing capacity would be determined on a medicine by
medicine basis, and there were references to economic
issues, acknowledging at least that the high cost of
domestic manufacturing could be the cited as a rationale for
importing medicines. The current text would automatically
allow the LDCs to quality as importers, but would provide a
two-part test for all other countries. The first test would
be a determination that there exists no manufacturing
capacity on the pharmaceutical sector. Very few countries
could meet this test. Certainly South Africa, Kenya, Ghana,
Nigeria, Zimbabwe, Uganda and many other countries have some
manufacturing capacity. The second test, paragraph (ii),
requires a determination that manufacturing capacity is
insufficient for purposes of meeting its needs. Some
delegates argue that this will provides flexibility for a
member to consider the economic feasibility of local
manufacturing, but of course, the United States,
Switzerland, Canada and the European Union, countries that
seek to narrow the import eligibility, were successful in
eliminating explicit language on these very points. We are
left with what the United States and others can argue is an
engineer's definition of capacity. They will say that any
significant capacity to manufacture in a country will render
a member country ineligible for imports. PhRMA and its
Member country allies will clearly argue that Kenya, Ghana,
Zimbabwe, South Africa, Brazil, Malaysia, Argentina, Chile,
Mexico, the Philippines, and virtually any non-LDC with any
amount of economic development will be excluded as an
importer. This issue is too important to be ambiguous.
This unfortunately is also an area where the Motta text is
completely at odds with the requirement in paragraph 4 of
the Doha Declaration that we seek to implement TRIPS in a
manner to "promote access to medicines for all." The
greatest opportunities for extending greater coverage for
medicines exist in the middle-income developing countries.
Brazil has indicated that its current program of universal
access to necessary medicines is not sustainable without the
ability to import cheap medicines, or to creditably use the
threat of a compulsory license to negotiate better prices.
Malaysia and Thailand are considering universal access to
HIV medicines, but will not do this unless they can obtain
low prices based upon imported materials. And there is
also a close link between the fate of the middle income
countries and the poorer countries. The existence today of
cheap generic antiretroviral (ARV) drugs is due to the
earlier decision by Brazil to purchase generic AIDS drugs.
The Brazil purchases created a competitive market of generic
suppliers, and this has benefited the poorest countries in
Africa. What the Motta text seeks is to marginalize the
generic suppliers by limiting their market to LDCs only.
Had this been the case before, Brazil would never have been
able to offer universal access to HIV drugs, and Africa and
other countries would never have obtained cheap ARVs. The
United States knows this. Switzerland knows this. Canada
knows this. And the European Union knows this. But these
countries have been relentless in excluding the middle-
income countries as importers, in order to protect this
market for the European and North American big pharma
companies.
Safeguards
Article 31.f of the TRIPS is 20 words. The Motta "solution"
to 31.f is eight pages. Most of this concerns the extensive
"safeguards" the European Union, Switzerland and others have
sought to attach to the agreement, including paragraphs 2, 4
and 5. None of the provisions in paragraphs 2, 4 or 5 are
necessary or desirable. The TRIPS already has extensive
safeguards for patent owners in Article 31 and other in
other existing TRIPS provisions, and these additional
requirements should be rejected. We are particularly
critical the provisions that raise costs to generic
producers, impose costly and difficult expectations that
developing countries will police diversion, when there is no
evidence that generic products have been diverted in
significant amounts to OECD countries, and the provisions
that require the WTO TRIPS Council to be notified of
individual licenses. Once patent owners have their
individual licenses sent directly to the TRIPS council it is
a matter of time before those right owners ask the TRIPS
council to resolve disputes regarding those licenses.
The TRIPS Chair has defended the extensive notice and other
safeguard provisions in part on the basis that transparency
is beneficial. In our view, the transparency for this
system should be exactly the same as it is for the Article
30 and Article 31 exceptions that the North America and
European Countries routinely use, and not something
extraordinary such has been proposed.
Legal Mechanisms
The OECD countries have clearly imposed a non-permanent,
litigious, complex and irrational legal mechanism. There is
no benefit except to big pharma to have requirements for
dual compulsory licenses issued. There is no rational
basis for having the compensation determined in the
exporting country, since the most important issue is
affordability in the importing country.
Prejudice to other export strategies.
A big concern is that the Motta proposal may have the
practical effort of prejudicing a county's unilateral
efforts to adopt a much better Article 30 solution, based
upon the European Parliament's Amendment 196. The norms
adopted in this proposal will undermine any national Article
30 approach that works differently.
Opposition for developing country generic industry
Generic industry groups from Africa, Asia and Latin America
have all opposed the approaches outlined in the Motta text.
Any "solution" that does not address their legitimate
concerns should be rejected, since the developing country
generics industries will be key to any solution that
actually works.
Given these and other concerns, we regretfully ask the WTO
delegates to reject the Motta text.
Sincerely
James Love
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.
Paragraph 6 was the unfinished business of the Doha
Declaration. It imperfectly raised a well-known problem in
the TRIPS. While the TRIPS accord permits compulsory
licensing of patents for a variety of public interest
objectives, including the protection of the public health,
it's practical use is constrained by Article 31.f of the
TRIPS, which normally limits exports to predominate use in
the domestic market. It is simply economically inefficient
to have domestic production for every medicine a county may
need, and there are also other barriers to local production
such as scarce know how, trade secrets and regulatory
barriers. Paragraph 6 of the Doha Declaration recognized
explicitly one aspect of the problems presented Article
31.f, namely that:
Members with insufficient or no manufacturing
capacities in the pharmaceutical sector could face
difficulties in making effective use of compulsory
licensing under the TRIPS Agreement.
At the outset, public health and development groups urged
the WTO delegates to address the larger issue of the
economics of the health care sector and to craft a
"solution" to this paragraph that would allow the WTO to
address the mandate in paragraph 4 of the Doha Declaration,
and to make certain the well known flexibilities that are
outlined in Paragraph 5 of the Declaration are meaningful
for the poor. In this regard, it was noted that only a
handful of countries with large domestic markets could
effectively use compulsory licensing for domestic only
production. It was pointed out endlessly that it was both
irrational and unfair that countries with small domestic
markets would not benefit from compulsory licensing in the
same way.
Smaller countries that did have generic industries did
not have domestic markets sufficiently large to enable
those industries to operate on an economic scale.
Those industries had to export in order to be able to
manufacture in sufficient quantities to achieve
economies of scale, so that domestic consumers could
receive the benefits of cost-effective generic
products. . . . exceptions that had the effect of
confining all activities to a single country were of
little use to countries that, unlike the United States,
depended on international trade to obtain generic
products.
The case for a more general export provision can plainly be
read from the Canadian early working case. Other
governments have also considered such measures.
Representative Sherrod Brown has proposed in the United
States Congress that Article 30 of the TRIPS be used to
permit exports of medicines to address public health
emergencies, in a bill introduced following the United
States and Canadian experiences with Anthrax. On October
23, 2002, the European Parliament adopted Amendment 196 to
the European Medicines Directive. This amendment provided
the precise solution that the TRIPS Council should have
adopted.
Manufacturing shall be allowed if the medicinal product
is intended for export to a third country that has
issued a compulsory licence 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 third country.
The European Parliament Amendment 196 is only 52 words, but
it provides exactly the correct policy framework to balance
the objectives of Paragraph 4 of the Doha Declaration, while
protecting the legitimate interests of patent owners.
"pharmaceutical product" means any patented product, or
product manufactured through a patented process, of the
pharmaceutical sector needed to address the public
health problems as recognized in paragraph 1 of the
Declaration.
The debate over the scope of diseases has been bitter and
offensive. The notion advanced by the United States, Japan
and other countries that diseases such as cancer, heart
disease or asthma do not constitute public health problems
in developing countries is outrageous. There are also a
number of treatments for infections that would not be
included in the proposals to limit the scope to epidemics.
Vaccines were explicitly included in earlier drafts, but
removed after Japan objected on the ground that vaccines
technically are not pharmaceuticals, a concession that is
appalling to every public health expert, and given the well
known barriers to domestic production for vaccines, truly
evidence of how far we have wandered from the patient
interest. The current text allows the issues of scope to be
argued later, and undoubtedly will be a basis for US
bilateral pressure on weak countries.
Consumer Project on Technology
Ruth Mayne
Oxfam International
Ellen 't Hoen
MSF
Spring Gombe
Health Action International, Europe
FMI
James Love CPTech +41.79.569.6022
Ruth Mayne, Oxfam +44.1865.31.2279
Michael Bailey, Oxfam + 44.79.681.96102
Ellen 't Hoen MSF +33.6.2237.5871
Spring Gome HAI +31.20.683.3684
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