Public health and the TRIPs

Developing and least developed countries were supposed to have the benefit of a moratorium on implementing pharmaceutical patents until the years 2005 and 2016 respectively. But these concessions have been effectively neutralized by industrially developed nations. On one hand, they have narrowly interpreted the flexibility (compulsory licensing, diseases to be treated, etc.) provided within the agreement to promote public health so as to enable their multinational drug companies to maximize profits. On the other hand, they have managed to get large nations like Brazil and India to amend their patent laws and bring them in line with the TRIPS agreement. Thus the advantages of the moratorium have been more or less nullified well ahead of the deadlines provided. During this period of moratorium they were to provide Exclusive Marketing Rights (EMR) to those who had obtained patents in other member countries on or after the date of the entry into force of the TRIPS agreement, for marketing their products in these countries.

Developed countries and Pharmaceutical companies in order to maximize their profits were always sternly against compulsory licensing of their products, which were made quite obvious after the South African Legislation Scenario. A number of pharmaceutical companies challenged the South African legislation empowering the Minister of Health to issue compulsory license (granting permission to a third party to manufacture a patented drug) under certain circumstances, which he deemed to be of utmost national importance. It led to a lot of hue and cry by the Human Rights Groups & NGO’s accusing pharmaceutical companies of putting profits before human lives. This controversy led to the Doha Declaration on Public Health of November 2001. And as a result of intense lobbying and pressure from the ‘Africa group’, and from Brazil and India as supplying countries, the Fourth Ministerial Meeting at Doha in November 2001 produced a ‘Declaration on the TRIPS Agreement and Public Health’. This agreed that ‘the TRIPS Agreement does not and should not prevent members from taking measures to protect public health and made specific reference to HIV/AIDS, tuberculosis, malaria and other epidemics, and to members’ ‘right to promote access to medicines for all’.

The Doha Declaration essentially confirms the existing TRIPS balance between the preservation of patent rights and the need to promote the availability of affordable medicines to the poor. The objective of the Doha Declaration on the TRIPS Agreement and Public Health was to clarify the official stand on certain provisions of TRIPS relating to public health. Doha Declaration does not define ‘Public Health’. In addition to that, the very fact that the document restricts itself to certain specific epidemics creates a problem as the flexibility maybe allowed only in the case of these particular diseases. Some diseases are prevalent prominently in other countries and might be a problem there, but not in other countries, this is also not taken into account. Moreover, it does not help in preventive measures but only to solve a crisis already arisen. In the first part it starts with an introduction to the issue by recognizing “the gravity of the public health problems afflicting many developing and least developed countries, especially those resulting from HIV AIDS, tuberculosis, malaria and other epidemics”(Para 1), while stressing at the same time that the TRIPS agreement should be part of the solution (Para 2). Similarly the Declaration recognizes that intellectual property protection is important for the development of new medicines, while also recognizing concerns about its effects on prices (Para3). Subsequently, in a second part containing the more operative paragraphs 4 and 5, the Declaration reiterates that the TRIPS Agreement does not and should not prevent WTO members from taking measures to protect public health. Consequently, while reiterating the commitment of all WTO members to the TRIPS agreement, the Declaration affirms that interpretation and implementation of that agreement should be supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all. In this connection, Ministers reaffirmed the right of WTO members to make full use of TRIPS flexibility to address public health issues including in particular the right of each member to grant compulsory licenses and determine the grounds upon which such licenses are granted (sub-paragraph5 B), and the right of each member to determine what constitutes a national emergency or other circumstances of extreme urgency (Sub –paragraph 5C).

Finally, in the third part (Para 6 & 7), the Declaration reaffirms the existing commitment of developed Members to provide incentives to their private industry to encourage the transfer of technology to least developed Members and instructs the TRIPS Council to undertake further work on two outstanding issues.

First, after recognizing that “WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing” it instructs the TRIPS Council “to find an expeditious solution to this problem and report to the General Council before the end of 2002”. Second, while agreeing to waive the obligation of least developed countries to provide patent protection with respect to pharmaceutical products until 1 January 2016, it instructs the TRIPS Council to take the necessary action for that purpose.

It was already clear in Doha that the Geneva follow up negotiations would be difficult. The main controversial issues throughout the discussions were which countries should be allowed to import, which products, for what diseases, from which possible exporters, and under what safeguards, and through which legal form this additional flexibility should be created.

First was the question of the beneficiary importing countries. The text proposed by Mexican Ambassador Eduardo Perez Motta, chairperson of the TRIPS Council did not get the approval of developing countries as it proposed the grant of permission to countries to export medicines to LDCs and to a very small number of developing countries that meet the test of insufficient manufacturing capacity. Since this, in effect, meant that any member with some capacity to manufacture would be ineligible to import, and thus the developing countries rejected the Motta text. The compromise solution suggested in the 16th December 2002 text of the Chair defines eligible importing member as any least-developed Member and any other Member that notifies the TRIPS Council of its intention to use the system, the only criteria being( not for LDCs) they may themselves establish that they have no or insufficient productive capacity in the pharmaceutical sector.

Secondly, was the question of what products should be allowed to import under the special mechanism of the Doha Declaration. The question arose in Geneva whether the proposed mechanism should cover end products i.e, patented medicines or also active ingredients or intermediate products and patented production processes. Developing countries wanted wide coverage but the Developed countries restricted the definition to the patented products. The compromise took a liberal view and stated that, it is understood that active ingredients necessary for its manufacture and diagnostic kits needed for its use would also be included in the definition of importable products. That compromise therefore takes account of the wish of developing countries to have a product coverage that goes beyond patented pharmaceuticals, while also linking the product coverage.

Third was the question of exporting countries. Most members saw no reason to limit the circle of exporting countries. The importing countries should in any case have the possibility to obtain the best product at the best price. The compromise solution suggested in the 16th December 2002 text of the Chair refers to “ exporting member” which is defined as any member using the system to produce pharmaceutical products for, and export them to, an eligible importing member.

Fourthly, on the question which safeguards should accompany the mechanism, the Doha Declaration was silent. After prolonged discussions on safeguards in Geneva, 16 December 2002 compromise proposal contains obligations for the exporting member, the importing member and other members. As regards the obligations already listed in Article 31 of the TRIPS agreement, the proposal starts from the presumption that the only obligation that is waived for the exporting Member is the obligation not to export production under a compulsory license, but to use the quantities produced predominantly for the supply of its domestic market. This is because importing member countries without local manufacturing capacities will not be able to make use of this provision as they cannot issue licenses to manufacturers based in another member state; nor can they import from other member states. Therefore the exporting member may produce and export the pharmaceutical product concerned to the extent required by the importing member. The same presumption applies to the importing members in which the product concerned is patented but several of its obligations are waived including the obligation under Art.31(h) TRIPS to pay remuneration to the right holder if remuneration is paid in the exporting country and, for certain importers, the obligation under Art.31(f), not to re export the products concerned. Parallel imports occur when a product is sold by patent holder in one country is exported by a buyer to another country when the price for the same is higher.

Fifthly on the question for which diseases imports of pharmaceutical products should be made possible the Doha Declaration contained the same ambiguity as for the product scope since it could be interpreted as referring to the pharmaceutical products needed to address more specifically “public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics”. (Para 1) or to the wider concepts of” medicines”(Para4) or the products of the “pharmaceutical sectors” (Para 6). Many Developed countries submitted that the scope of diseases should be limited to the ones mentioned in Para 1 of the Declaration. However, a broad majority of the WTO membership believed that the mechanism should not be limited but that should be up to each member to decide when it faces a public health problem. No clear consensus could be reached regarding this issue and it was left to be judged according to the enormity of the situation faced by the suffering country.

In August 2003, WTO member countries agreed that compulsory license can be issued to import generic medicines from other countries subject to certain conditions. All the LDCs are considered to have insufficient manufacturing capacity, thus allowing them to import medicines without notifying the TRIPS Council. However, Developing countries intending to import medicines using compulsory license have to notify the Council and prove that they have no/insufficient manufacturing capacity. The exporting countries will have to disclose the quantity of drugs exported and distinguish them by adopting a different method of packaging.

In a decision subsequently made permanent, by amending the TRIPS Agreement on 6th December 2005, an exporting member was allowed to waive the requirement of Art.3(f)-that production should be predominantly for the supply of the domestic market-provided that the importing Member

(i) Specifies the names and expected quantities of the product(s) needed;

(ii) Confirms in due process, unless it is an LDC, that it does not have the manufacturing capacity;

(iii) Confirms that it intends to grant a compulsory license where the pharmaceutical product in question is already patented in the importing country, in accordance with Art. 31

On the side of the country exporting the generic alternative, the producer concerned must specify in its request for a compulsory license for export the exact amount of intended production. It must also ensure that the product will be clearly identified with specific labeling or marking. All these details are to be posted on a website, and the exporting member must notify the Council for TRIPS of these and all other details.

The requirement that medicines for export produced under compulsory license be specifically identified is intended to prevent diversion to third markets, a point emphasized in a statement by the Chairman of the General Council that gave examples of ”best practice” guidelines, issued at the same time as the Doha Declaration. This statement also declared that “the system that will be established will be used in good faith to protect public health and….not be an instrument to pursue industrial or commercial policy objectives.”

In these four documents (TRIPS Agreement, Doha Declaration, 30 August 2003 General Council decision on the Implementation of Paragraph 6, and the Chairman’s statement) that define the terms under which any developing country may produce, export, and import pharmaceutical products, including generic varieties of original patented products. But there are various impending difficulties that LDCs and developing countries face with respect to these documents. An inherent requirement for these documents to be of consequential value is that the countries should be TRIPS compliant, which is not the case in many countries and hence this might lead to deterioration of available medicines. Moreover compulsory licenses are to be issued for fixed quantities even in a national emergency, in contrast to having an open-ended agreement, implies the possibility of a series of repeat applications which would carry a risk of discontinuity in supply while paperwork and formalities, when there will be utmost requirement in the importing country.

The Indian Scenario

The compulsory licensing system is really the lifeline for domestic companies, since India has a Product Patents System. The procedure for granting such licenses needs to be simple and effective. The Indian law provides for a number of grounds for the granting of such licenses on grounds of high prices, non-availability, to promote commercial activity etc. unfortunately the procedure for granting has been left ambiguous.

There are four concerns regarding this

1. There is no clear time frame for administrative procedures are completed after an application for CL is received. This will in turn cause delay even when there is a valid cause.
2. There is no cap on royalty to be paid to the patentee by the licensee.
3. The non-incorporation of Art.31 (b) of TRIPS as a clear ground for issuing CL.
4. The provision for a 3 year “lock in” period which prohibits any CL application before expiry of a 3 year period since the grant of patent.

In general practice, its seen that country laws do not decide time frames or royalty caps. Royalty is supposed to be paid according to the economic value and innovation content of the patent. But due to the delicacy of the situation, it is advised that more stringent specifications be implemented.

The three year lock in period (S.84) in the Indian law is a continuation of what was provided for in the 1970 Act and draws from the Paris Convention. It is generally seen that the lag time between the filing of a Patent, its grant, and actual commercialization is at least 4-5 years. So the three year period may not be too high, in reality. But the necessity for finding rapid cures for diseases of critical importance, like HIV-AIDS, and the possibility to put the commercialization of some of these on a fast track, the three year lock-in could inhibit early issuing of CLs even if otherwise warranted. India should consider using the clause in its Act (S.92) which allows for a compulsory license in situations of extreme urgency or national emergency, thereby making the three year lock in period inconsequential.

The TRIPS agreement allows country laws to define what is patentable and what is not. It is customary for country laws to incorporate the three principles of novelty, inventive step and usefulness. In the Indian law, inventive step has been defined as a feature of an invention that “involves technical advances as compared to the existing knowledge or having economic significance or both”. The term economic significance dilutes this criterion and gives scope for trivial inventions with economic significance to be patented. Countries like India should have stronger criteria to define these stipulations, in order to restrict the number of patents and not a liberal outlook.

Sec. 3 (d) enumerates which inventions cannot be patented, which tightens the definitions and prevents ever greening of patents (i.e. extending patent periods by making small changes in the original molecules or by finding new uses for the same). The phrase “unless they differ significantly in properties with regard to efficacy “is of great concern. It has been argued that this phrase can be arbitrarily interpreted to allow for some degree of ever-greening as what constitutes a significant different in efficacy is subjective. Suitable amendment needs to be carried out with regard to this clause.

Sec.11A clause (7) First Para gives the patent applicant all the privileges of a patent holder, thereby limiting the works of other scientists working on a similar project and hence obstructing innovation.

The definition of pharmaceutical substance and patentability of micro organisms is also another concern to public health. Pharmaceutical substance is not sufficiently defined.

Moreover micro organisms and micro organism processes are also patentable which is harmful for the development breakthroughs in the field of medicine.

Therefore we can see that Indian Patent Act does provide for Public Health but is highly inconsistent with the global standards in order to provide cheaper medicines and better innovations.