Greedy Sleazy Patent Owners vs. Poor Sick People International Patent Protection and Access to Drugs in the Third World Liz Durham November 4, 2003

Overview Origins of the Access Problem: TRIPS –Minimum Standards of IP Protection –“Safety Valves” »Compulsory Licensing The Problem with Exportation: Market Segmentation The Doha Declaration

Two Competing Goals Incentivize R&D for new drugs Improve access to drugs (e.g., reduce prices), especially in poor countries –Requires STRONG patent protection –Requires EXCEPTION to patent monopoly *** TRIPS attempts to BALANCE these two goals!!!

“Safety Valves” Under TRIPS Tech transfer Delayed application for LDCs Restrictions on Patent Protection –Subject Matter –Patent Misuse –Research Exception –Parallel Imports (Exhaustion) –Compulsory Licensing

Requirements for Compulsory Licensing Under Art (b): Attempted to obtain voluntary license –May be waived in the case of a “national emergency” or “public non-commercial use” 31(f): Supply for the domestic market only 31(g): Limited time– terminated when special circumstances have subsided 31(h) PO paid adequate remuneration

An Ironic Example: Cipro Canada: Greedy PO (Bayer) vs. the Generic Hero (Apotex) –Resolution: reluctant donation U.S.: H.R (Nov. 2001)H.R ** Similar legislation: H.R (May 2001)H.R. 1708

The Current Example: Third World Diseases National Emergency (esp. public health) Special circumstances still exist  Problem: NO DOMESTIC MANUFACTURING CAPACITY ** Why do we need this “domestic” limitation anyway?? Will not be able to get supply without violating Art. 31(f) restriction!!

Market Segmentation Price of Ethambutol in Different Countries † † From a paper presented by Richard Laing (Associate Prof. at Boston University School of Public Health) at a 2001 WTO/WHO workshop in Hosbjor, Norway. Diversion/Parallel Import

Parallel Imports WHO Report (1999) The exhaustion provision of TRIPS “allows the supply of the product to be increased and prices to be moderated through competition…. Member States could improve the accessibility of products, including drugs, by establishing that the exclusive rights of the patent holder may not be claimed in cases where products marketed with that patent holder's consent in any other country are imported.” U.K. Commission Report (2002) “In principle, it is undesirable for there to be restrictions upon the free movement of products once placed on the market by a manufacturer. But in practice, and strictly for the purpose of ensuring that lower priced products can be supplied to, and only to, those who need the lower prices, it may be necessary to derogate from that general principle.” ** Allowed since TRIPS doesn’t address exhaustion!!

The Doha Declaration (Nov. 14, 2001) “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 expeditious solution to this problem and to report to the General Council before the end of 2002.”

Issues in Implementing Doha (1) Who are the beneficiary importing countries? (2) What products should countries be allowed to import? (3) Who are eligible exporting countries? (4) What legal form which the proposed mechanism should take? (5) For which diseases should imports be made possible? (6) What safeguards must be implemented?

Issue #1: Importing Countries Aug. 30 Agreement: 1.“any least-developed country Member”, 2.“any other Member that has made a notification Only in case of a national emergency or public non- commercial use Some criteria, requires investigation (see annex) Some members abstain (see fn.3) Doha: “WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector” (¶ 6). Broader purpose (e.g., public health)? Criteria? Self-assessed?

Issue #2: Products Aug. 30 Agreement: 1.“any patented product [or product made with a patented process],” including: active ingredients diagnostic kits 2.“needed to address the public health problems as recognized in ¶ 1” Doha: Recognize both needs to “promote access to medicines” and “protect public health” (¶ 4) Related to disease question (see #5) Drugs? Diagnostic kits?

Issue #3: Exporting Countries Aug. 30 Agreement: “Member using the system... to produce pharmaceutical products for, and export them to, an eligible importing Member” Note ¶ 7 of the agreement– consider tech transfer Doha:????? Technology transfer? (¶ 7) Need IPRs to encourage R&D (¶ 3)

Issue #4: Legal Form Aug. 30 Agreement: 1.“The obligations of an exporting Member under Article 31(f) of the TRIPS Agreement shall be waived….” 2.Indicates possibility for amendment (¶ 11) (waiver is a temporary fix?) Doha:?????????? Amendment of TRIPS? Remove Art. 31(f) provision? Waivers/moratoria

Issue #5: Diseases Aug. 30 Agreement: “‘pharmaceutical product’... needed to address the public health problems as recognized in ¶ 1 of the Declaration.” Doha: “public health problems afflicting many [LDCs], especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.” (¶ 1) Exhaustive?? Other lists? **Couldn’t come to an agreement on this in Geneva!

Issue #6: Safeguards Aug. 30 Agreement: 1.Products “shall be clearly identified... through specific labeling or marking” (e.g., special packaging and/or special coloring or shaping of the products themselves) (¶ 2(b)(ii)) “Suppliers” do this “Provided that such distinction is feasible and does not have a significant impact on price”– what does this modify?? Doha:“We recognize that intellectual property protection is important for the development of new medicines.” (¶ 3) What measures (see Watal at ELD-8 to -9)? Who should bear the cost/burden? How should compensation be determined?

Issue #6: Safeguards (cont’d) 2.“the licensee shall post on a website [information regarding the details of the licensed products]”. (¶ 2(b)(iii)) 3.“importing Members shall take reasonable measures... to prevent re-exportation of the products that have actually been imported into their territories” (¶ 4) proportionate to their administrative capacities and the risk of trade diversion within their means (assistance from ICs where needed) 4.“Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under the system 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 Agreement.” (¶ 5) 5.Remuneration: “taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member.” (¶ 3)

Will the U.S. Respect Doha? Bilateral Treaties  TRIPS-plus!!! (FTAA, CAFTA) –Exhaustion– must address within 5 years –Extension of term for delays in patent office –More restrictive compulsory license scheme –Guarantee of 5-year exclusivity for drugs before generic “FDA” approval granted (see Abramowitz talk) vs. USTR Zoellick