10439.pdf
Media
- extracted text
-
Intellectual Property Rights Series
Imports by and Exports to
Countries with Insufficient or
No Manufacturing Capacities in
the Pharmaceutical Sector
Measures Required by the WTO Decision of
30 August 2003 in Relation to the
TRIPS Agreement and Public Health
TWN
Third World Network
8
Imports by and Exports to Countries with
Insufficient or No Manufacturing Capacities
in the Pharmaceutical Sector
Measures Required by the WTO Decision of 30 August 2003
in Relation to the TRIPS Agreement and Public Health
TWN
Third World Network
Imports by and Exports to Countries with
Insufficient or No Manufacturing Capacities
in the Pharmaceutical Sector
Measures Required by the WTO Decision of 30 August 2003 in Relation
to the TRIPS Agreement and Public Health
is published by
Third World Network
121-S, Jalan Utama
10450 Penang, Malaysia.
© Third World Network 2005
Printed by Jutaprint
2 Solok Sungei Pinang 3, Sg. Pinang
11600 Penang, Malaysia.
ISBN: 983-2729-52-1
CONTENTS
1
(a)
Overcoming the TRIPS Restriction on
Pharmaceutical Imports by and Exports to
Countries with Insufficient Manufacturing Capacity
Background to the “Paragraph 6” issue in the Doha Declaration
on the TRIPS Agreement and Public Health
b)
1
1
Problem of countries with insufficient or no manufacturing
capacities
1
(c)
In search of a solution
2
(d)
The Decision and Statement
4
2
Conditions and Measures for Implementing the
Waiver to the TRIPS Restriction
5
(a)
Countries and situations where the waiver is not required
5
(b)
General situation where the waiver is required
6
(c)
Measures required by the importing country
7
3
Measures Required by the Exporting Country
(a)
Notify the WTO
10
(b)
Conditions of the compulsory licence
11
(c)
Payment of compensation
12
(d)
Regional arrangements
12
4
Additional Requirements under the WTO
General Council Chairperson’s Statement
13
Comment on the ‘Dampening Effect’ of the
Conditions and Procedures in the Decision and
Chairperson’s Statement
15
5
6
Limited Area of Applicability of the Decision
17
7
Conclusions
19
References
22
Annex 1
23
Annex 2
29
Annex 3
30
Annex 4
33
NOTE
This report is on the measures required by countries lacking drug manufactur
ing capacity and wishing to import generic drugs and measures required by
countries able and willing to export generic drugs and wishing to overcome the
constraints imposed by TRIPS Article 31(f) that production under compulsory
licence has to be supplied predominantly for the domestic market. It is based on
the Decision of 30 August 2003 adopted by the WTO General Council.
This report is a supplement updating the Manual on Good Practices in Public-
Health-Sensitive Policy Measures and Patent Laws, published by the Third
World Network.
1
(a)
Overcoming the TRIPS
Restriction on Pharmaceutical
Imports by and Exports to
Countries with Insufficient
Manufacturing Capacity
Background to the “Paragraph 6” issue in the Doha Declaration on
the TRIPS Agreement and Public Health
THE Doha Declaration on the TRIPS Agreement and Public Health adopted in
November 2001 states that the TRIPS Agreement “does not and should not”
prevent Members from taking measures to protect public health, and affirmed
that the Agreement can and should be interpreted and implemented in a manner
supportive of the WTO Members’ right to protect public health and promote
access to medicines for all.
The Declaration confirmed the right of developing countries to use compulsory
licences (CLs) to override patents on medicines, in order to allow generic drug
manufacturers to produce cheaper versions of patented medicines.
(b) Problem of countries with insufficient or no manufacturing
capacities
However, at the Doha Ministerial meeting, there was also a recognition of a
particular problem. Countries that want access to cheaper generic drugs but do
not have the capacity to produce their own drugs will have to rely on imports of
the generic drugs. An option for these countries is to grant a CL or a “govern
ment use” order for the import of such drugs. However these countries may
find it difficult to obtain the drugs because the TRIPS Agreement limits the
amount of generic versions of patented drugs that a country (that has the capac
ity to produce them) may export. This is because the TRIPS Agreement (Ar-
tide 31(f)) requires that the production of generic drugs under a CL is “pre
dominantly for the supply of the domestic market".
This restriction means that only a limited amount of the generic drugs produced
under CL in a country can be exported, since a “predominant" portion of the
output must be supplied to the domestic market. The portions that are allowed
to be exported by the countries that can produce may not be sufficient to meet
the needs of the countries wishing to import. Thus countries lacking production
capacity and that would like to use compulsory licensing to import could find it
difficult or impossible to obtain the required amounts of affordable medicines.
Whilst the Ministers recognized the problem, they were unable to agree to a
solution, and they therefore delegated the task of finding “an expeditious solu
tion” to the WTO’s TRIPS Council.
Paragraph 6 of the Doha Declaration states: “We recognize that WTO 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. We instruct the Council for TRIPS to find an expedi
tious solution to this problem and to report to the General Council before the
end of 2002.”
(c)
In search of a solution
After the Doha meeting, the WTO members spent many months trying to find
common ground for a solution. A few major countries suggested that they could
agree to a temporary waiver to the Article 31 (f) restriction for developing coun
tries, provided the scope of diseases was limited, and that the waiver be only for
national emergencies or in circumstances of extreme urgency. These conditions
were unacceptable to the developing countries, which argued that they would
detract from what had been achieved in the Declaration, which did not restrict
the scope of diseases in its coverage, and did not restrict its application only to
national emergencies.
2
On 16 December 2002, the Chair of the TRIPS Council produced a text con
taining a proposed solution, which was accepted as a compromise by almost all
Members except the United States. The deadline was thus missed. Negotiations
then stalled on the proposed solution, known as the December 16 text.
On 30 August 2003, the WTO General Council finally adopted the original 16
December text, together with an accompanying Statement by the Chair of the
WTO General Council. The 30 August documents are known as “Implementa
tion of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Pub
lic Health: Decision of 30 August 2003”, and “The General Council
Chairperson’s Statement”.
The 30 August Decision is in the nature of a “temporary solution” as it also
mandates that work be carried out to amend the TRIPS Agreement, to be initi
ated by the end of 2003 with a view to its adoption within six months, i.e. by the
end of June 2004. This deadline has been missed, and a new deadline was fixed
for March 2005.
The 30 August “temporary solution” is in the form of an interim waiver to the
Article 31(f) restriction, such that countries producing generic versions of pat
ented products under CLs would be allowed to export the products to eligible
importing countries, without having to limit the exported amount, as the condi
tion that the output must be “predominantly for the domestic market” is waived.
However, the Decision also obliges importing and exporting countries that wish
to make use of the waiver to undertake several measures and fulfill several
conditions. It has been pointed out by some experts and NGOs that these mea
sures and conditions are difficult for the relevant companies and governments
to comply with. As a result, the Decision is hardly an “expeditious solution”, as
called for by paragraph 6 of the Doha Declaration.
Below is a brief explanation of the Decision and Chairperson’s statement, and
an outline of the measures that countries are required to follow, should they
wish to import or export under the waiver. Whether the set of measures can be
3
implemented easily, or proves too complicated and difficult to implement re
mains to be seen.
(d) The Decision and Statement
The Decision of 30 August 2003 covers pharmaceutical products, active ingre
dients necessary for their manufacture, and diagnostic kits.
The “solution" is an interim waiver of the Article 31 (f) limitation on exports. It
revokes the requirement that pharmaceutical products produced under a CL
shall be “predominantly for the supply of the domestic market”. The waiver
allows a predominant portion or even the entire quantity of output produced
under a CL to be exported to countries that are “eligible” to import under the
scheme.
The Decision was accompanied by a statement by the General Council Chair,
which had been drawn up after intense consultations among a few members in
the weeks before the end of August. The Chair’s statement elaborates on some
“key shared understandings” of how the Decision would be interpreted and
implemented. The statement, which places more conditions in addition to those
in the Decision, was an attempt to provide some language that would be accept
able to the United States, whose big pharmaceutical companies were concerned
that the Decision would give be advantageous to the producers of generic drugs,
which are their rivals.
The Statement states that Members recognize that the system established by the
Decision “should be used in good faith to protect public health” and “not be an
instrument to pursue industrial or commercial policy objectives.” It also states
that “all reasonable measures” should be taken to prevent diversion of medi
cines from the markets for which they are intended, and elaborates on the trade
diversion prevention measures that are required to be taken by countries using
the Decision.
4
Conditions and Measures for
Implementing the Waiver to
the TRIPS Restriction
2
(a)
Countries and situations where the waiver is not required
THE special measures required to obtain a waiver to Article 31(f) of the TRIPS
Agreement need not be applied in countries and situations where such a waiver
is not needed. Examples of these are as follows:
(i)
Countries wishing to produce and export a generic pharmaceutical prod
uct can do so without a CL if there is no patent in force on the product. In
this case, there is no limit to the export.
(ii)
Where a generic version of a patented pharmaceutical product is being
produced under CL in a country, the generic product can be exported in
amounts up to the level where the output would no longer be “predomi
nantly supplied for the domestic market.” Up to this level, the special
measures required under the 30 August Decision need not apply. For
amounts to be exported above this level, the special measures will have to
be applied. It should be noted that the TRIPS Agreement does not define
the meaning of the term “predominantly”.
(iii)
If a country wishes to import a generic version of the product, the import
ing country can do so without having to resort to the special measures
required for the waiver (such as notification to the TRIPS Council) if it is
able to find a foreign supplier of the generic product where:
-
the product is not patented in the supplying country; or
-
the product is under patent in the supplying country, and the
country has issued a CL enabling production of the generic product,
and the output is predominantly supplied to the domestic market (even
after taking into account the new amount to be exported).
NOTE: A country wishing to import a generic product need not issue a CL to
import if there is no patent in force on the product in the country.
In this
context, it is important to note that LDCs need not allow for drug patents until
2016. However, if a patent is in force on the product in the country, then the
country is required to issue a CL in order to import. Whether the importing
country requires a CL to import is a separate issue from whether the exporting
country requires a waiver in order to export.
(b) General situation where the waiver is required
The objective of the Decision is to allow for countries wishing to import ge
neric medicines to do so from a foreign generic producer, without the latter
being constrained by having to produce under CL “predominantly for the do
mestic market.”
Where a patent is in force in the importing country on the drug in question, the
importing country government will have to issue a CL to enable the import of
the generic version of the patented drug. In the exporting country, if a patent is
in force, then the generic manufacturer would have to obtain a CL to produce
the drug and export it.
Therefore, in many cases, two CLs will have to be issued. Under the TRIPS
Agreement and confirmed by the Doha Declaration, WTO Members have the
right to determine the grounds for the grant of CLs. The standard procedural
conditions for the grant of CL are set out in the TRIPS Agreement (Article 31),
which includes the condition that an application for a CL should be preceded by
a failed attempt to obtain a voluntary licence from the patent holder, and the
condition that the person or agency obtaining the CL payment should pay com
pensation to the patent holder.
6
The Decision modifies some of these requirements and sets out another set of
procedures to be complied with, when the waiver of Article 31(f) is required to
allow for generic medicines made in one country to be exported to another.
(c)
Measures required by the importing country
When a developing country wishes to import a generic product, and a waiver is
required by the exporting country (because it would no longer be producing
predominantly for the domestic market), the importing country will have to do
the following:
(i)
Notify the WTO
The country has to notify the WTO’s TRIPS Council of its intention to use the
solution as an importer. The notification must:
•
Specify the names and expected quantities of product(s) needed;
•
Confirm that it has established that it has insufficient or no manufac
turing capacities in the pharmaceutical sector for the product in ques
tion. However, LDCs need not make such a confirmation. (See Para
2 below for ways to establish this lack of capacities);
•
Confirm, where the product is patented in the country, that it has
granted or intends to grant a CL in accordance to TRIPS article 31
and this Decision (Decision, Para 2 (a)).
An important footnote in the Decision states that: “It is understood that this
notification does not need to be approved by a WTO body in order to use the
system set out in this Decision.” Thus, whilst importing countries have to no
tify, the notification will not be subjected to the need for approval.
(ii) Establish insufficient or no manufacturing capacities.
As part of the notification, the importing country has to establish it has insuffi
cient or no manufacturing capacities. LDCs are automatically deemed to qualify
and thus need not establish their lack of capacity. Other developing countries
7
have to establish either that:
•
they have no manufacturing capacity in the pharmaceutical sector;
or
•
the capacity is currently insufficient for the purpose of meeting its
needs. (Annex to the Decision).
The assessment that the country has no or insufficient manufacturing capacity
is for the particular pharmaceutical product required, and not for pharmaceuti
cal products in general. The importing country can either establish that it has
no manufacturing capacity, or that it has some pharmaceutical manufacturing
capacity but has found that (excluding the capacity owned or controlled by the
patent holder) it is presently insufficient to meet its needs.
Under the Decision, countries are to make this determination themselves. There
are no criteria or methods to establish the lack of capacity of insufficient capac
ity. The Chair’s statement says that notification by the importing country would
include information on how it has established that it has insufficient or no manu
facturing capacities in the pharmaceutical sector. However the outcome of the
self-assessment cannot be challenged by other Members or be subject to review
or rejected by the TRIPS Council (Correa 2004, pl7).
(iii) Take measures against trade diversion
Importing countries shall take “reasonable measures within their means” to
prevent re-exportation of the products that have actually been imported under
the system, as “proportionate to their administrative capacities and to the risk
of trade diversion”. Developed countries shall provide, on request, technical
and financial cooperation to countries having difficulty implementing this pro
vision (Decision, para 4).
(iv) Grant a CL to import
Where the product is patented in the country, and there is an intention to import
a generic version of it, the government has to grant a CL to import. According
8
to the Decision, the grant of the licence should be in accordance to TRIPS
Article 31 and this Decision.
(v)
Payment of compensation waived
Where a CL has been granted by the importer, and the exporting member has
also issued a CL for the same product, the exporting country has to pay ad
equate compensation to the patent holder, but the obligation of the importing
country to pay compensation under Article 31(h) shall be waived (Decision,
para 3).
The national law should specify that in the case of granting a CL for import
under the Doha Declaration Paragraph 6 situation (i.e. when the country does
not have adequate manufacturing capacity for the particular drugs), compensa
tion to the patent holder is waived.
NOTE: The Decision notes that 23 developed countries will not use the sys
tem set out in the Decision as importing Members. The Chairman’s Statement
also notes that 11 countries (Hong Kong China, Israel, Korea, Kuwait, Macao
China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey, United Arab Emir
ates) agreed they will only use the system as importers in situations of national
emergency or other circumstances of extreme urgency, as will the 10 countries
EU accession countries (and on joining the EU, these countries will opt out of
using the system as importers).
9
3
Measures Required by the
Exporting Country
THE importing country will need to locate a generic manufacturer that is will
ing and able to supply the medicines required. The generic manufacturer will
require a CL if the medicine is under patent protection in its country. Any WTO
members (including the developed countries) may grant a CL to its domestic
generic manufacturer to produce and export to the importing country under the
scheme.
The obligations of an exporting Member under Article 31(f) of TRIPS shall be
waived with respect to a CL granted by it, to the extent necessary to produce
pharmaceutical products and its export to an eligible importing member.
The terms and requirements include the following:
(a)
Notify the WTO
When a government decides to grant a CL, it must notify the WTO’s TRIPS
Council of the grant of the CL and its conditions, including the name and ad
dress of the licensee, the product(s), the quantities for which it has been granted,
the importing countries to which the product is to be supplied, and the duration
of the CL, as well as the address of the website on which information regarding
the product has been posted.
An important footnote states that this notification does not need to be approved
by a WTO body in order to use the system under the Decision.
(b) Conditions of the compulsory licence
The CL issued under the Decision must be subject to the following conditions:
(i)
Only the amount needed by the importing Member may be manufactured
under the licence, and all of this output must be exported to the importing
country.
[Note: The amount needed to be supplied is to be established by the importing
country, which makes the order to the exporting country. To avoid transaction
costs and delays in obtaining a CL, it is possible to consider the granting of an
amendable CL that expands the amount to be supplied based on subsequent
requests by the importing country or countries (Correa 2004, p22).J
(ii)
The products produced under the licence must be clearly identified as be
ing produced under this system through labeling or marking (e.g., special
packaging and/or colouring/shaping of the products) provided such dis
tinction is feasible and does not significantly impact on price.
[Note: The Decision recognizes that the labeling or marking required may in
some cases have a significant impact on price. The impact of price can also be
assessed from the importing country’s perspective, since the price would have
an effect on access to the drug. The Decision does not specify who should make
the assessment on whether the impact is significant. It is apparent the supplier
is expected to make this judgment, taking the purchasers’ interests into account
(Correa 2004, p23).]
(iii)
The generic manufacturer is obliged, prior to shipment, to post on a website
information on the quantities supplied to each importing country and the
distinguishing features of product.
11
(c)
Payment of compensation
Where a CL is granted on a product, adequate remuneration (pursuant to Ar
ticle 31(h) of TRIPS) shall be paid to the patent holder, taking into account the
economic value to the importing Member of the use that has been authorized in
the exporting country. (The importing country need not pay compensation for
the same product).
(d) Regional arrangements
Within a regional trade agreement in which at least half the members are LDCs,
a developing or least developed country' shall enjoy a waiver to Article 31 (f) of
TRIPS to the extent needed to enable a product produced or imported under a
CL to be exported to other countries in the regional trade agreement.
12
4
Additional Requirements under
the WTO General Council
Chairperson’s Statement
IN addition to the conditions in the Decision, there is another set of conditions
contained in the accompanying Chairperson’s Statement. This may add to the
hurdles that developing countries have to face when they consider making use
of the system under the Decision.
Below are some of the conditions or requirements under the Chairperson’s State
ment and concerns that arise from them:
(a)
The system should be used in good faith to protect public health, and “not
be an instrument to pursue industrial or commercial policy objectives.”
If this is interpreted strictly, it could prevent the use of the Decision if its use
were to result in an expansion of the generic drugs industry or if the generic
manufacturers were to make any profit. In any case, it adds a layer of uncer
tainty to how the Decision can be used.
(b)
The Statement also clarifies that the obligation to label and mark the prod
ucts under this scheme apply not only to formulated pharmaceuticals but also to
active ingredients and finished products produced using such ingredients.
Thus the scope of the products subjected to the special labeling and marking is
clarified to be wider, subjecting more products to cumbersome procedures.
(c)
The Statement states the Members understand that in general special pack
aging, colouring or shaping should not have a significant impact on prices of
the products.
This seems to suggest that generic manufacturers producing for export under
the Decision will now have to comply with the requirement for special packag
ing, colouring or shaping, regardless of its impact on the price of the product.
This to some extent dilutes the Decision, which had stated that the products
should be distinguished, provided this is “feasible and does not have a signifi
cant impact on price”, implying that the requirement need not be fulfilled if it is
unfeasible or has a significant price effect. However, the statement can also be
read to imply that generally there should not be a significant impact on price;
however there also could be a significant impact in specific cases, and thus in
such cases the requirement for marking or labeling need not be fulfilled.
(d)
The Statement says any Member may bring matters relating to interpreta
tion or implementation of the Decision to the TRIPS Council for expeditious
review, with a view to taking “appropriate action”. Members having concerns
the terms are not fully complied with can use the offices of the Director General
or the TRIPS Council chair to find a mutually acceptable solution.
Thus, the Statement establishes a right and mechanism for Members to chal
lenge the validity of another Member’s use of the system in the draft decision.
There are concerns that these elements could have a “chill effect” on countries
in their use of the Decision. However, it is also apparent that “bringing the
matters” up to the TRIPS Council or to the Director General is in the nature of
discussion and consultation towards a “mutually acceptable solution” and does
not constitute a formal and binding dispute settlement case in the WTO.
14
5
Comment on the ‘Dampening
Effect’ of the Conditions and
Procedures in the Decision
and Chairperson’s Statement
CONCERNS have been raised that the terms and conditions in the Decision are
burdensome and act as a disincentive or a barrier against the use of the Deci
sion. This is particularly true of the obligations placed on exporting countries
and the generic producers. Before embarking on an investment to produce for
exports, a generic manufacturer has to be convinced that it would be economi
cally viable and beneficial for it to apply for a CL and to make use of the system
under the Decision.
If granted a CL, the generic manufacturer may face the conditions of the CL as
stated above, on top of the other usual conditions for obtaining a CL.
It would appear that the requirements may have to be fulfilled anew for each
batch of medicines produced under a CL, and for each and every country to
which the drug will be exported. Besides this, other requirements have to be
satisfied, relating to product registration and drug safety (such as proof of bio
equivalence of the generic product). For these reasons, there are serious con
cerns that these conditions may deter a generic manufacturer, in terms of the
cost implications, as well as the bureaucratic red tape.
For prices to be lowered to levels affordable to the majority of the developing
country populations, it would make sense to encourage competition between as
many generic manufacturers as possible. Competition from the introduction of
generics would also bring down prices of patented medicines, and this has been
demonstrated in many studies. However, the generic manufacturers would have
to be able to achieve economies of scale or cost efficiencies to remain viable.
The producer may be dependent on large enough production runs to stay in
business. The trade diversion prevention measures, in requiring each batch of
medicines to be manufactured in different shapes or colours, will be obstacles
to achieving this.
The Chairperson’s Statement, with its “understandings”, adds further to the
deterrent effect that hinders countries from actually making use of the “solu
tion." The Chairperson’s Statement has been criticised by civil society
organisations as another set of obstacles that restricts or limits the effectiveness
of an already imperfect solution to the Paragraph 6 problem.
16
6
Limited Area of Applicability
of the Decision
THE 30 August Decision applies only in some circumstances, and these are
specific and limited.
The Decision does not reduce the affirmations of the Doha Declaration, nor
does it reduce the existing flexibilities in the TRIPS Agreement. On the con
trary, it does provide an addition to the flexibilities available, by giving a waiver
(however cumbersome and imperfect) to the implementation of article 31 .f with
regard to having to produce under CL “predominantly for the domestic mar
ket.” Paragraph 9 of the Decision affirms that the Decision is “without preju
dice to the rights, obligations and flexibilities....under the TRIPS Agreement
other than paragraphs (f) and (h) of Article 31, including those reaffirmed by
the (Doha) Declaration and to their interpretation.”
The Decision does not affect whether WTO Members may issue CLs and on
which grounds. The TRIPS Agreement (article 31) and the Doha Declaration
are clear that WTO Members are allowed to grant CLs on any grounds, pro
vided that certain procedural and substantive conditions are fulfilled.
The Decision thus deals only with the case of WTO members wishing to export
a predominant part of their production under CL. Where a predominant part of
the production under CL is provided for the domestic market, the Decision
would not apply. In such cases, the limitations and conditions placed on ex
ports under Article 31(f) is not relevant.
The Article 31(f) restriction on export does not apply (and thus the waiver un
der the Decision is not required) under some situations, including the follow
ing:
(a)
Where production of medicines is under a CL and the portion to be ex
ported does not constitute a “predominant” part of the output (for example, if
the exported part is less than 50% of the output);
(b)
Where a CL is granted on grounds that such a license is needed to correct
anti-competitive behaviour on the part of the patent holder, under Article 31 (k)
ofTRIPS.
Therefore, it would appear that where a Member seeks to export under these
circumstances, it need not meet any of the terms and conditions specified under
the Decision. WTO Members should therefore explore the means of using these
rights and flexibilities as an alternative or in conjunction with the Decision.
In addition, the Decision does not apply and the waiver is not needed if the
product is not under patent protection in the producing country.
18
7 Conclusions
IT remains to be seen whether and how well the developing countries will be
able to make use of the “interim solution” and if it will in fact, make access to
affordable medicines more of a reality. The Decision will be put to the test
when developing countries attempt to make use of it. It will then be better
known whether the measures and conditions contained in the Decision and the
Chairperson’s statement can be complied with, or whether they are an insur
mountable obstacle.
Developing country governments will have to take the appropriate measures,
including establishing appropriate legal provisions that enable them to exercise
the best policy options, and issuing CLs for the import of generic medicines,
where needed.
Generic manufacturers in other countries will have to respond to the needs of
the importing countries by making applications for CLs to produce and export.
In the cases where CLs are required, the governments will have to issue CLs for
production and export by their generic manufacturers to produce and export,
and to establish appropriate laws that also enable them to make full use of the
policy flexibilities available.
When the share of production for exports rises to be so high that it almost over
takes the share of production for the domestic market, then the companies and
governments concerned will have to invoke the waiver and comply with the
measures required for using the 30 August Decision. Meanwhile, the devel
oped countries can also grant CLs for export if these are applied for by their
own generic manufacturers.
The Decision represents only one aspect of the broad framework that the Doha
Declaration provides to safeguard against unaffordable prices for much-needed
medicines. The Doha Declaration affirms the right of WTO Members to em
ploy other measures to facilitate the protection of public health and promote
access to medicines.
The implementation of these measures in developing countries is far from com
plete. Therefore, countries should take urgent measures to adopt and adapt their
national patent laws, so as to make full use of the flexibilities in the TRIPS
Agreement, as affirmed by the Doha Declaration.
The Doha Declaration also granted the right to not provide for pharmaceutical
patents to least-developed WTO Members (LDCs) until 2016. Therefore, these
countries do not have to enforce or provide for patents on pharmaceutical prod
ucts until 2016 at the earliest. LDCs should use this flexibility to enable them
to structure their patent laws and data protection rules, so as to better protect
public health and promote access to affordable medicines.
The negotiations leading up to the Doha Declaration and the recent Decision
have highlighted the effects of patents on the prices of, and access to, medi
cines. The implications of the TRIPS Agreement on public health and access to
medicines are now better understood. International public opinion will judge of
whether the declarations and decisions in the WTO have had a real impact on
improving people's access to affordable medicines. If it is judged that these
have not been effective, it may be that pressures will then begin for more far-
reaching changes.
Finally, the Decision recognizes that its measures constitute only a temporary
mechanism through a interim waiver. It recognizes that a permanent solution is
required, involving an amendment to the TRIPS Agreement. The deadline for
finding the permanent solution had been set (by the Decision) for the end of
20
June 2004 and this has been extended to March 2005. It is hoped that this “per
manent solution”, when it materializes, will be more effective and expeditious
than the present “temporary solution.”
21
REFERENCES
Correa, Carlos (2004). Implementation of the WTO General Council Decision on
Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.
Geneva: World Health Organisation.
Third World Network (2003). Manual on Good Practices in Public-Health-Sensi
tive Policy Measures and Patent Laws. Penang: Third World Network.
World Trade Organisation (2003). Implementation of Paragraph 6 of the Doha Dec
laration on the TRIPS Agreement and Public Health: Decision of 30 August 2003.
World Trade Organisation (2003). The General Council Chairperson’s Statement,
30 August 2003.
22
ANNEX 1
IMPLEMENTATION OF PARAGRAPH 6 OF THE DOHA
DECLARATION ON THE TRIPS AGREEMENT AND
PUBLIC HEALTH
Decision of 30 August 2003
The General Council,
Having regard to paragraphs 1, 3 and 4 of Article IX of the Marrakesh Agreement
Establishing the World Trade Organization (“the WTO Agreement”);
Conducting the functions of the Ministerial Conference in the interval between
meetings pursuant to paragraph 2 of Article IV of the WTO Agreement;
Noting the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/
DEC/2) (the “Declaration”) and, in particular, the instruction of the Ministerial
Conference to the Council for TRIPS contained in paragraph 6 of the Declaration
to End an expeditious solution to the problem of the difficulties that WTO Mem
bers with insufficient or no manufacturing capacities in the pharmaceutical sector
could face in making effective use of compulsory licensing under the TRIPS Agree
ment and to report to the General Council before the end of 2002;
Recognizing, where eligible importing Members seek to obtain supplies under the
system set out in this Decision, the importance of a rapid response to those needs
consistent with the provisions of this Decision;
Noting that, in the light of the foregoing, exceptional circumstances exist justifying
waivers from the obligations set out in paragraphs (f) and (h) of Article 31 of the
TRIPS Agreement with respect to pharmaceutical products;
23
Decides as follows:
1.
For the puqroscs of this Decision:
(a) "pharmaceutical product" means any patented product, or product manufac
tured through a patented process, of the pharmaceutical sector needed to address
the public health problems as recognized in paragraph 1 of the Declaration. It is
understood that active ingredients necessary for its manufacture and diagnostic kits
needed for its use would be included1;
(b) "eligible importing Member" means any least-developed country Member, and
any other Member that has made a notification2 to the Council for TRIPS of its
intention to use the system as an importer, it being understood that a Member may
notify at any time that it will use the system in whole or in a limited way, for
example only in the case of a national emergency or other circumstances of ex
treme urgency or in cases of public non-commercial use. It is noted that some Mem
bers will not use the system set out in this Decision as importing Members3 and that
some other Members have stated that, if they use the system, it would be in no more
than situations of national emergency or other circumstances of extreme urgency;
(c) “exporting Member” means a Member using the system set out in this Decision
to produce pharmaceutical products for, and export them to, an eligible importing
Member.
2. The obligations of an exporting Member under Article 31(f) of the TRIPS
Agreement shall be waived with respect to the grant by it of a compulsory licence
to the extent necessary for the purposes of production of a pharmaceutical product(s)
and its export to an eligible importing Member(s) in accordance with the terms set
out below in this paragraph:
This subparagraph is without prejudice to subparagraph 1(b).
It is understood that this notification does not need to be approved by a WTO body in
order to use the system set out in this Decision.
3 Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway,
Portugal, Spain, Sweden, Switzerland, United Kingdom and United States of
America.
1
2
24
(a) the eligible importing Member(s)4 has made a notification2 to the Council for
TRIPS, that:
(i)
specifies the names and expected quantities of the product(s) needed5;
(ii)
confirms that the eligible importing Member in question, other than a
least-developed country Member, has established that it has insufficient
or no manufacturing capacities in the pharmaceutical sector for the
product(s) in question in one of the ways set out in the Annex to this
Decision; and
(iii)
confirms that, where a pharmaceutical product is patented in its terri
tory, it has granted or intends to grant a compulsory licence in accor
dance with Article 31 of the TRIPS Agreement and the provisions of
this Decision6;
(b) the compulsory licence issued by the exporting Member under this Decision
shall contain the following conditions:
(i)
only the amount necessary to meet the needs of the eligible importing
Member(s) may be manufactured under the licence and the entirety of
this production shall be exported to the Member(s) which has notified
its needs to the Council for TRIPS;
(ii)
products produced under the licence shall be clearly identified as being
produced under the system set out in this Decision through specific la
belling or marking. Suppliers should distinguish such products through
special packaging and/or special colouring/shaping of the products them
selves, provided that such distinction is feasible and does not have a
significant impact on price; and
Joint notifications providing the information required under this subparagraph may be
made by the regional organizations referred to in paragraph 6 of this Decision on
behalf of eligible importing Members using the system that are parties to them, with
the agreement of those parties.
5 The notification will be made available publicly by the WTO Secretariat through a
page on the WTO website dedicated to this Decision.
6 This subparagraph is without prejudice to Article 66.1 of the TRIPS Agreement.
25
(iii)
before shipment begins, the licensee shall post on a website the follow
ing information:
the quantities being supplied to each destination as referred to in
indent (i) above; and
the distinguishing features of the product(s) referred to in indent (ii)
above;
(c) the exporting Member shall notify78the Council for TRIPS of the grant of the
licence, including the conditions attached to it.s The information provided shall
include the name and address of the licensee, the product(s) for which the licence
has been granted, the quantity(ies) for which it has been granted, the country(ies) to
which the product(s) is (are) to be supplied and the duration of the licence. The
notification shall also indicate the address of the website referred to in
subparagraph (b)(iii) above.
3. Where a compulsory licence is granted by an exporting Member under the
system set out in this Decision, adequate remuneration pursuant to Article 31 (h) of
the TRIPS Agreement shall be paid in that Member taking into account the eco
nomic value to the importing Member of the use that has been authorized in the
exporting Member. Where a compulsory licence is granted for the same products in
the eligible importing Member, the obligation of that Member under Article 31(h)
shall be waived in respect of those products for which remuneration in accordance
with the first sentence of this paragraph is paid in the exporting Member.
4. In order to ensure that the products imported under the system set out in this
Decision are used for the public health purposes underlying their importation, eli
gible importing Members shall take reasonable measures within their means, pro
portionate to their administrative capacities and to the risk of trade diversion to
prevent re-exportation of the products that have actually been imported into their
territories under the system. In the event that an eligible importing Member that is
a developing country Member or a least-developed country Member experiences
difficulty in implementing this provision, developed country Members shall pro
7
8
26
It is understood that this notification does not need to be approved by a WTO body in
order to use the system set out in this Decision.
The notification will be made available publicly by the WTO Secretariat through a
page on the WTO website dedicated to this Decision.
vide, on request and on mutually agreed terms and conditions, technical and finan
cial cooperation in order to facilitate its implementation.
5. Members shall ensure the availability of effective legal means to prevent the
importation into, and sale in, their territories of products produced under the sys
tem set out in this Decision and diverted to their markets inconsistently with its
provisions, using the means already required to be available under the TRIPS Agree
ment. If any Member considers that such measures arc proving insufficient for this
purpose, the matter may be reviewed in the Council for TRIPS at the request of that
Member.
6. With a view to harnessing economies of scale for the purposes of enhancing
purchasing power for, and facilitating the local production of, pharmaceutical prod
ucts:
(i)
where a developing or least-developed country WTO Member is a party to a
regional trade agreement within the meaning of Article XXIV of the GATT
1994 and the Decision of 28 November 1979 on Differential and More
Favourable Treatment Reciprocity and Fuller Participation of Developing
Countries (L/4903), at least half of the current membership of which is made
up of countries presently on the United Nations list of least-developed coun
tries, the obligation of that Member under Article 31(f) of the TRIPS Agree
ment shall be waived to the extent necessary to enable a pharmaceutical prod
uct produced or imported under a compulsory licence in that Member to be
exported to the markets of those other developing or least-developed country
parties to the regional trade agreement that share the health problem in ques
tion. It is understood that this will not prejudice the territorial nature of the
patent rights in question;
(ii)
it is recognized that the development of systems providing for the grant of
regional patents to be applicable in the above Members should be promoted.
To this end, developed country Members undertake to provide technical co
operation in accordance with Article 67 of the TRIPS Agreement, including
in conjunction with other relevant intergovernmental organizations.
7. Members recognize the desirability of promoting the transfer of technology and
capacity building in the pharmaceutical sector in order to overcome the problem
27
identified in paragraph 6 of the Declaration. To this end, eligible importing Mem
bers and exporting Members are encouraged to use the system set out in this Deci
sion in a way which would promote this objective. Members undertake to cooper
ate in paying special attention to the transfer of technology and capacity building in
the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of
the TRIPS Agreement, paragraph 7 of the Declaration and any other relevant work
of the Council for TRIPS.
8. The Council for TRIPS shall review annually the functioning of the system set
out in this Decision with a view to ensuring its effective operation and shall annu
ally report on its operation to the General Council. This review shall be deemed to
fulfil the review requirements of Article IX:4 of the WTO Agreement.
9. This Decision is without prejudice to the rights, obligations and flexibilities that
Members have under the provisions of the TRIPS Agreement other than paragraphs
(f) and (h) of Article 31, including those reaffirmed by the Declaration, and to their
interpretation. It is also without prejudice to the extent to which pharmaceutical
products produced under a compulsory licence can be exported under the present
provisions of Article 31(f) of the TRIPS Agreement.
10. Members shall not challenge any measures taken in conformity with the provi
sions of the waivers contained in this Decision under subparagraphs 1(b) and 1(c)
of Article XX11I of GATT 1994.
11. This Decision, including the waivers granted in it, shall terminate for each
Member on the date on which an amendment to the TRIPS Agreement replacing its
provisions takes effect for that Member. The TRIPS Council shall initiate by the
end of 2003 work on the preparation of such an amendment with a view to its
adoption within six months, on the understanding that the amendment will be based,
where appropriate, on this Decision and on the further understanding that it will not
be part of the negotiations referred to in paragraph 45 of the Doha Ministerial
Declaration (WT/MIN(01)/DEC/l).
28
ANNEX 2
ASSESSMENT OF MANUFACTURING CAPACITIES IN THE
PHARMACEUTICAL SECTOR
Least-developed country Members are deemed to have insufficient or no manu
facturing capacities in the pharmaceutical sector.
For other eligible importing Members insufficient or no manufacturing capaci
ties for the product(s) in question may be established in either of the following
ways:
(i)
the Member in question has established that it has no manufac
turing capacity in the pharmaceutical sector;
OR
(i)
where the Member has some manufacturing capacity in this
sector, it has examined this capacity and found that, excluding any
capacity owned or controlled by the patent owner, it is currently in
sufficient for the purposes of meeting its needs. When it is estab
lished that such capacity has become sufficient to meet the Member’s
needs, the system shall no longer apply.
29
ANNEX 3
THE GENERAL COUNCIL CHAIRPERSON’S STATEMENT
30 AUGUST 2003
The General Council has been presented with a draft Decision contained in
document IP/C/W/405 to implement paragraph 6 of the Doha Declaration on
the TRIPS Agreement and Public Health. This Decision is part of the wider
national and international action to address problems as recognized in para
graph 1 of the Declaration. Before adopting this Decision, I would like to place
on the record this Statement which represents several key shared understand
ings of Members regarding the Decision to be taken and the way in which it
will be interpreted and implemented. I would like to emphasize that this State
ment is limited in its implications to paragraph 6 of the Doha Declaration on
the TRIPS Agreement and Public Health.
First, Members recognize that the system that will be established by the Deci
sion should be used in good faith to protect public health and, without prejudice
to paragraph 6 of the Decision, not be an instrument to pursue industrial or
commercial policy objectives.
Second, Members recognize that the purpose of the Decision would be de
feated if products supplied under this Decision are diverted from the markets
for which they are intended. Therefore, all reasonable measures should be taken
to prevent such diversion in accordance with the relevant paragraphs of the
Decision. In this regard, the provisions of paragraph 2(b)(ii) apply not only to
formulated pharmaceuticals produced and supplied under the system but also
to active ingredients produced and supplied under the system and to finished
products produced using such active ingredients. It is the understanding of
30
Members that in general special packaging and/or special colouring or shaping
should not have a significant impact on the price of pharmaceuticals.
In the past, companies have developed procedures to prevent diversion of prod
ucts that are, for example, provided through donor programmes. “Best prac
tices” guidelines that draw upon the experiences of companies are attached to
this statement for illustrative purposes. Members and producers are encouraged
to draw from and use these practices, and to share information on their experi
ences in preventing diversion.
Third, it is important that Members seek to resolve any issues arising from the
use and implementation of the Decision expeditiously and amicably:
•
To promote transparency and avoid controversy, notifications under
paragraph 2(a)(ii) of the Decision would include information on how
the Member in question had established, in accordance with the An
nex, that it has insufficient or no manufacturing capacities in the phar
maceutical sector.
•
In accordance with the normal practice of the TRIPS Council, notifi
cations made under the system shall be brought to the attention of its
next meeting.
Any Member may bring any matter related to the interpretation or
implementation of the Decision, including issues related to diver
sion, to the TRIPS Council for expeditious review, with a view to
taking appropriate action.
If any Member has concerns that the terms of the Decision have not
been fully complied with, the Member may also utilise the good of
fices of the Director General or Chair of the TRIPS Council, with a
view to finding a mutually acceptable solution.
Fourth, all information gathered on the implementation of the Decision shall be
brought to the attention of the TRIPS Council in its annual review as set out in
paragraph 8 of the Decision.
In addition, as stated in footnote 3 to paragraph 1 (b) of the Decision, the follow
ing Members have agreed to opt out of using the system as importers: Australia,
Austria, Belgium, Canada, Denmark. Finland, France, Germany, Greece, Ice
land, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway,
Portugal, Spain, Sweden, Switzerland, United Kingdom and United States of
America.
Until their accession to the European Union. Czech Republic, Cyprus, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland. Slovak Republic and Slovenia agree
that they would only use the system as importers in situations of national emer
gency or other circumstances of extreme urgency. These countries further agree
that upon their accession to the European Union, they will opt out of using the
system as importers.
As we have heard today, and as the Secretariat has been informed in certain
communications, some other Members have agreed that they would only use
the system as importers in situations of national emergency or other circum
stances of extreme urgency: Hong Kong China, Israel, Korea, Kuwait, Macao
China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey, United Arab Emir
ates.
32
ANNEX 4
“BEST PRACTICES” GUIDELINES
Companies have often used special labelling, colouring, shaping, sizing, etc. to
differentiate products supplied through donor or discounted pricing programmes
from products supplied to other markets. Examples of such measures include
the following:
•
Bristol Myers Squibb used different markings/imprints on capsules sup
plied to sub Saharan Africa.
•
Novartis has used different trademark names, one (Riamet®) for an antimalarial drug provided to developed countries, the other (Coartem®) for
the same products supplied to developing countries. Novartis further dif
ferentiated the products through distinctive packaging.
•
GlaxoSmithKline (GSK) used different outer packaging for its HIV/AIDS
medications Combivir, Epivir and Trizivir supplied to developing coun
tries. GSK further differentiated the products by embossing the tablets
with a different number than tablets supplied to developed countries, and
plans to further differentiate the products by using different colours.
•
Merck differentiated its HIV/AIDS antiretroviral medicine CRIX1VAN
through special packaging and labelling, i.e., gold-ink printing on the cap
sule, dark green bottle cap and a bottle label with a light-green background.
•
Pfizer used different colouring and shaping for Diflucan pills supplied to
South Africa.
33
Producers have further minimized diversion by entering into contractual ar
rangements with importers/distributors to ensure delivery of products to the
intended markets.
To help ensure use of the most effective anti-diversion measures, Members
may share their experiences and practices in preventing diversion either infor
mally or through the TRIPS Council. It would be beneficial for Members and
industry to work together to further refine anti-diversion practices and enhance
the sharing of information related to identifying, remedying or preventing spe
cific occurrences of diversion.
34
IMPORTS BY AND EXPORTS TO COUNTRIES WITH
INSUFFICIENT OR NO MANUFACTURING CAPACITIES
IN THE PHARMACEUTICAL SECTOR
Measures Required by the WTO Decision of 30 August 2003
in Relation to the TRIPS Agreement and Public Health
This TWN report is on the measures required by countries lacking drug
manufacturing capacity and wishing to import generic drugs and measures required
by countries able and willing to export generic drugs and wishing to overcome the
constraints imposed by TRIPS Article 31(f) that production under compulsorylicence has to be supplied predominantly for the domestic market. It is based on
the Decision of 30 August 2003 adopted by the WTO General Council.
This report is a supplement updating the Manual on Good Practices in PublicHealth-Sensitive Policy Measures and Patent Laws, published by the Third World
Network.
TWN INTELLECTUAL PROPERTY RIGHTS SERIES
is a series of papers published by the Third World Network to provide
a critical analysis of intellectual property rights protection from a Third
World perspective. A particular focus is given to the WTO Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) and its
implications for developing countries.
Position: 4658 (1 views)