Access v. Patents: We Still Can’t Get Along Srividhya Ragavan University of Oklahoma Law Center

What has been “achieved”… Doha Declaration: Doha Declaration: Objective based interpretation Objective based interpretation TRIPS is read vis-à-vis Art 7 and 8’s promise TRIPS is read vis-à-vis Art 7 and 8’s promise Clarified that Art 30 and 31 with an access based ideology Clarified that Art 30 and 31 with an access based ideology We recognized the problem was the impossibility of working para 6 of the Doha Declaration We recognized the problem was the impossibility of working para 6 of the Doha Declaration

The term “the problem” refers to effective use of CL The term “the problem” refers to effective use of CL But effective use of CL was meant to enable access. But effective use of CL was meant to enable access. Access remained the underlying central issue Access remained the underlying central issue In addressing the para 6 problem, HK Implementation creates the assumption that the access issue is solved. In addressing the para 6 problem, HK Implementation creates the assumption that the access issue is solved.

Consequently, access question is not fully solved. Consequently, access question is not fully solved. Further, HK Declaration blocks the use of other means to enable access – which are perhaps more effective. Further, HK Declaration blocks the use of other means to enable access – which are perhaps more effective.

Highlights of the Hong Kong Implementation Implementation of Para 6 of the Doha Declaration Implementation of Para 6 of the Doha Declaration Allows members to export generic drugs under art 31(f) of TRIPS Allows members to export generic drugs under art 31(f) of TRIPS LDCs are exempted from all obligations under LDCs are exempted from all obligations under Part 5 and 7 of TRIPS (patents) Part 5 and 7 of TRIPS (patents) Article 70 (9) (transitional) until 2016 Article 70 (9) (transitional) until 2016

Hong Kong declaration discusses: Hong Kong declaration discusses: Exporter’s obligation, and Exporter’s obligation, and Importer’s obligation Importer’s obligation

The Exporter’s obligations

Para 3 of the Hong Kong Declaration Para 3 of the Hong Kong Declaration Where a compulsory license 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 economic 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. Where a compulsory license 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 economic 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.

Where a compulsory license 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…. Where a compulsory license 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…. Exporter pays a license fee by virtue of the CL Exporter pays a license fee by virtue of the CL Although the CL is merely to export Although the CL is merely to export Importer merely uses exporter’s facility Importer merely uses exporter’s facility Ideology of CL – user or sub-licensee pays the license fee Ideology of CL – user or sub-licensee pays the license fee

Exporter merely provides manufacturing facility Exporter merely provides manufacturing facility Why should an exporter pay CL fees as long as exporter does not use the manufacture Why should an exporter pay CL fees as long as exporter does not use the manufacture Exporters patent should not matter as long as it is merely for export Exporters patent should not matter as long as it is merely for export

Further LDCs are not required to establish a patent regime - hence they do not need CL to access. Further LDCs are not required to establish a patent regime - hence they do not need CL to access. As far as they are concerned, they are free to copy As far as they are concerned, they are free to copy LDC that has manufacturing capacity is free to copy without CL LDC that has manufacturing capacity is free to copy without CL Hence, neither party should be paying a license fee if that member is merely producing for a LDC. Hence, neither party should be paying a license fee if that member is merely producing for a LDC. Consequence : Deters developing nations from exporting Consequence : Deters developing nations from exporting

Violation of Doha Declaration: Violation of Doha Declaration: WTO agreement would be read “ WTO agreement would be read “in a manner supportive of WTO Members' right to … promote access to medicines for all.” (para 4) TRIPS to be read with an objective based philosophy (para 5(a)) TRIPS to be read with an objective based philosophy (para 5(a)) Art 7 read with Art 8 - promote sectors vital to economic growth Art 7 read with Art 8 - promote sectors vital to economic growth

Exporter shall pay a license fee. Exporter shall pay a license fee. ….. taking into account the economic value to the importing Member … ….. taking into account the economic value to the importing Member … Valuation remains the most subjective issue & amenable to bargaining benefits of parties. Valuation remains the most subjective issue & amenable to bargaining benefits of parties. No guidelines to measure the economic value No guidelines to measure the economic value Value of patent? Value of patent? Economic Value in terms of enhanced productivity? Economic Value in terms of enhanced productivity? Value of the life saved?? – Then it shd be Zero, because if we did associate some value to life, then we won’t make a fuss to give the medication in the first place Value of the life saved?? – Then it shd be Zero, because if we did associate some value to life, then we won’t make a fuss to give the medication in the first place

Economic value may be different from both the value of the product as well as the ability to pay in the importing country Economic value may be different from both the value of the product as well as the ability to pay in the importing country Canada uses ability to pay as a measure Canada uses ability to pay as a measure The benefit of the value issue is that para 5 is worded to exclude the value issue from review The benefit of the value issue is that para 5 is worded to exclude the value issue from review

Post 2005, developing countries have become TRIPS compliant Post 2005, developing countries have become TRIPS compliant Less generics of newer medications Less generics of newer medications Therefore exports of existing patents will be supplied by the pharmaceutical industry Therefore exports of existing patents will be supplied by the pharmaceutical industry Unless, developing nation also issues a CL (and pays the licensing fee) Unless, developing nation also issues a CL (and pays the licensing fee) An additional burden deterring developing nations from exporting An additional burden deterring developing nations from exporting

The Importer’s obligation

Where a compulsory license 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 economic 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. Where a compulsory license 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 economic 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.

…. 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. …. 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.

…. 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. …. 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. But if the importing member is an LDC, then by issuing a CL, they are being forced to have a patent regime. But if the importing member is an LDC, then by issuing a CL, they are being forced to have a patent regime.

If the LDC does not issue a CL, then we are looking two remuneration: If the LDC does not issue a CL, then we are looking two remuneration: One licensing fee from importing member One licensing fee from importing member One licensing fee from exporting member One licensing fee from exporting member We rip the 3 rd world nation customers twice We rip the 3 rd world nation customers twice But if the importing member is an LDC, then logically he should not be paying a license fee – this circumvents the whole purpose But if the importing member is an LDC, then logically he should not be paying a license fee – this circumvents the whole purpose This adds up as additional revenue to the patent owner This adds up as additional revenue to the patent owner

Same carried over in paragraph 6 (i) Same carried over in paragraph 6 (i) LDCs should CL before it can: LDCs should CL before it can: Reexport within the regional trade arrangement (without paying an export fee) Reexport within the regional trade arrangement (without paying an export fee) But, they have to issue compulsory license But, they have to issue compulsory license Para 6 (2) prompts “development of systems for regional patents to be promoted” Para 6 (2) prompts “development of systems for regional patents to be promoted” It forces members to establish a patent regime even when there is no need to. It forces members to establish a patent regime even when there is no need to.

Conditions for being an importer Establishing that there is insufficient manufacturing capacity Establishing that there is insufficient manufacturing capacity What if two countries want to help each other What if two countries want to help each other Theory of comparative advantage – the basis of TRIPS has been compromised Theory of comparative advantage – the basis of TRIPS has been compromised LDCs are presumed not to have facilities – most beneficial only to developing nations LDCs are presumed not to have facilities – most beneficial only to developing nations Chairman’s statement also opposes working the spirit of the notion. Chairman’s statement also opposes working the spirit of the notion.

But if the whole objective is access, why do we need a CL licensing fee? But if the whole objective is access, why do we need a CL licensing fee? To protect an ideology To protect an ideology But Doha reiterated an exception which we refuse to honor now But Doha reiterated an exception which we refuse to honor now

Why do we need the license fee anyways?

Research & Development 1. We never needed it all these years 2. There is no quid pro quo for the research since these are focused on the developed nations drugs anyways

Review Mechanism Paragraph 5 - Review: Paragraph 5 - Review: Review on whether parallel importation is prevented appropriately. Review on whether parallel importation is prevented appropriately. Establishes this as a right. Establishes this as a right. It prevents: It prevents: Agreements between pharmaceutical companies with governments to prevent parallel importation in return for access Agreements between pharmaceutical companies with governments to prevent parallel importation in return for access

Impact of Regional and Bilateral Agreements Lastly, what happens to regional and bilateral agreements b/w dpd nations and developing nations Lastly, what happens to regional and bilateral agreements b/w dpd nations and developing nations Without taking these into consideration, the WTO opinion cannot be wholesome. Without taking these into consideration, the WTO opinion cannot be wholesome.

Limitation of the HK Declaration Does not clarify that this merely solves the para 6 problem Does not clarify that this merely solves the para 6 problem

Other solutions are blocked Process patent regime as an exception Process patent regime as an exception Price control by government Price control by government