Patents, access to medicines and the WTO ’ s TRIPs Agreement Consultative meeting on incorporation of TRIPs Flexibilities Morogoro, Tanzania 24 July 2006 Tenu Avafia Regional Service centre UNDP

What does this have to do with patents and the WTO TRIPs Agreement?

What is the link between the TRIPs Agreement and access to ARVs? To answer this question, it is necessary to explore the relationship between Intellectual Property Right Holders and consumers To answer this question, it is necessary to explore the relationship between Intellectual Property Right Holders and consumers

Intellectual Property Rights / Patents What are patents? What are patents? A patent gives the inventor the exclusive right to make, use, import, export, sell or market an invention in the country where the invention is patented. A patent gives the inventor the exclusive right to make, use, import, export, sell or market an invention in the country where the invention is patented. patenting an invention gives the patent owner a temporary monopoly over the invention. patenting an invention gives the patent owner a temporary monopoly over the invention. Patents governed by domestic and international law, particularly the TRIPs Agreement Patents governed by domestic and international law, particularly the TRIPs Agreement

Patent Criteria In order to qualify for a patent, an invention has to meet three criteria: In order to qualify for a patent, an invention has to meet three criteria: it must be something new;it must be something new; it must not be obvious but actually involve some sort of “ inventive step, ”it must not be obvious but actually involve some sort of “ inventive step, ” it must be usable. it must be usable. Both products and processes can be patented Both products and processes can be patented Indian generic companies rely on process patents Indian generic companies rely on process patents New use patents have been common e.g. AZT or Viagra New use patents have been common e.g. AZT or Viagra

Are patents necessary to stimulate R & D? Need to balance rights of inventor and consumer Need to balance rights of inventor and consumer Drug research and development extremely costly Drug research and development extremely costly Some companies claim that a new successful drug can cost as much as US$ 800 million Some companies claim that a new successful drug can cost as much as US$ 800 million Actual costs unknown, US$150 million theory Actual costs unknown, US$150 million theory Companies would not engage in R&D if there was no incentive for them to do so. Companies would not engage in R&D if there was no incentive for them to do so. Patent/temporary monopoly is reward to patent holder for investing money, time and resources Patent/temporary monopoly is reward to patent holder for investing money, time and resources the WHO has noted that of the 1223 new drugs developed between 1975 and 1996, only 11 were for tropical diseases the WHO has noted that of the 1223 new drugs developed between 1975 and 1996, only 11 were for tropical diseases

Are high costs of drugs justified? The high profit margins for patented drugs cannot be justified if we consider: The high profit margins for patented drugs cannot be justified if we consider: drugs commercialized by multinational companies have often been developed with significant public subsidies, drugs commercialized by multinational companies have often been developed with significant public subsidies, There are often large tax breaks for R&D There are often large tax breaks for R&D Often, the research is done by public institutions like universities who sell patent to drug companies at clinical trial phase Often, the research is done by public institutions like universities who sell patent to drug companies at clinical trial phase 5 first line drugs invented by universities 5 first line drugs invented by universities There are proposals in circulation to allow governments to pay inventors for essential medicines and then to own the IPR There are proposals in circulation to allow governments to pay inventors for essential medicines and then to own the IPR UK Government suggestion of prize fund UK Government suggestion of prize fund

The problem with profit driven patent system all of Africa accounts for the consumption of about 2% of global pharmaceutical profits all of Africa accounts for the consumption of about 2% of global pharmaceutical profits a profit driven system based on private patent rights provides an incentive to develop money making drugs a profit driven system based on private patent rights provides an incentive to develop money making drugs Even Indian generic companies are shifting their efforts to Western diseases for greater profit Even Indian generic companies are shifting their efforts to Western diseases for greater profit Initiatives other than patent incentives are required to stimulate R&D into diseases affecting mainly developing countries. Initiatives other than patent incentives are required to stimulate R&D into diseases affecting mainly developing countries. Medical R&D Treaty proposal Medical R&D Treaty proposal

Who can afford a vigorous patent system? Global Ranking of GDP in Luxembourg U$ Luxembourg U$ USA U$ USA U$ Japan U$ Japan U$ Australia U$ Australia U$ Portugal U$ Portugal U$ Brazil U$ Brazil U$ South Africa U$ South Africa U$ Angola U$ Angola U$ Ethiopia U$ Ethiopia U$ 191

Problems with “one size fits all” patent system Country Patents per million (1998) Japan994 USA289 Netherland s 196 South Africa 2.5 Brazil2 Mexico1 Graph clearly shows where a strong system of patent protection is most advantageous Graph clearly shows where a strong system of patent protection is most advantageous Participation in patent system has had largely negative results for developing countries to date Participation in patent system has had largely negative results for developing countries to date Few developing country patent offices conduct patent examinations Few developing country patent offices conduct patent examinations In most instances, development objectives in African countries are constrained by IP protection In most instances, development objectives in African countries are constrained by IP protection

Patents & Access to treatment Domestic laws that favour patented drugs over generic drugs can stifle competition Domestic laws that favour patented drugs over generic drugs can stifle competition Less competition = higher prices Less competition = higher prices Higher prices = less access Higher prices = less access Patents are one of the bottlenecks inhibiting access Patents are one of the bottlenecks inhibiting access Many countries still use patented drugs instead of generics Many countries still use patented drugs instead of generics Sustainability of programs sustained by donations of patented drugs e.g. PEPFAR Sustainability of programs sustained by donations of patented drugs e.g. PEPFAR

What is TRIPs? Agreement on Trade-Related Aspects of Intellectual Property Rights Agreement on Trade-Related Aspects of Intellectual Property Rights One of 3 principle agreements of the World Trade Organization (WTO ) One of 3 principle agreements of the World Trade Organization (WTO ) Sets out rules for intellectual property rights that all countries who belong to the WTO Sets out rules for intellectual property rights that all countries who belong to the WTO Not optional Not optional Article 33 protects the rights of patent holders for a MINIMUM period of 20 years Article 33 protects the rights of patent holders for a MINIMUM period of 20 years patents must be individually registered in the Country where protection is sought. patents must be individually registered in the Country where protection is sought.

TRIPs and Generics If a particular drug is: Not patented; or Not patented; or “ off patent ” i.e. patent has expired “ off patent ” i.e. patent has expired someone else may legally make, import or sell that drug or its equivalent someone else may legally make, import or sell that drug or its equivalent Generic drugs are interchangeable versions of patented (brand name) drugs. Generic drugs are interchangeable versions of patented (brand name) drugs. Generics almost always result in reduced drug prices Generics almost always result in reduced drug prices Less R&D costs involved Less R&D costs involved Quality varies but WHO EML includes several generics Quality varies but WHO EML includes several generics

Developing country views of TRIPs TRIPs only 10 years old TRIPs only 10 years old Developing countries still coming to terms with TRIPs implementation Developing countries still coming to terms with TRIPs implementation Not aware of far reaching implications of TRIPs during negotiations Not aware of far reaching implications of TRIPs during negotiations Most developed countries did not implement pharmaceutical patents until industries were developed Most developed countries did not implement pharmaceutical patents until industries were developed Patent rights were often ignored for technological advances e.g. Wright brothers Patent rights were often ignored for technological advances e.g. Wright brothers

Options under TRIPs to improve Treatment Access – “flexibility” Exclusions from or limitation of patentability Exclusions from or limitation of patentability Article 65 transitional period until 2016 for LDCs Article 65 transitional period until 2016 for LDCs Pre-grant oppositions Pre-grant oppositions Parallel importation Parallel importation General exceptions (e.g. Bolar provision and experimental use) General exceptions (e.g. Bolar provision and experimental use) Anti-Competitive remedy Anti-Competitive remedy Compulsory Licensing (clarified by Doha Declaration) Compulsory Licensing (clarified by Doha Declaration) 30 August Agreement 30 August Agreement

Doha Declaration on TRIPs and Public Health Before Doha Declaration, every attempt to use TRIPs flexibility fiercely opposed by Research based drug companies Before Doha Declaration, every attempt to use TRIPs flexibility fiercely opposed by Research based drug companies PMA v President of South Africa; US- Brazil WTO dispute are examples PMA v President of South Africa; US- Brazil WTO dispute are examples Doha Declaration adopted at a Ministerial meeting, November 2001 Doha Declaration adopted at a Ministerial meeting, November 2001 TRIPS "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, to promote access to medicines for all.“ TRIPS "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, to promote access to medicines for all.“ Officially allowed compulsory licensing Officially allowed compulsory licensing What if you do not have manufacturing capacity? What if you do not have manufacturing capacity?

30 August 2003 Agreement Doha Declaration on TRIPs was not useful to most countries in Africa Doha Declaration on TRIPs was not useful to most countries in Africa Most African countries do not have manufacturing capacity Most African countries do not have manufacturing capacity 30 August 2003 WTO General Council Decision allowed countries without manufacturing capacity to import generics produced under compulsory license 30 August 2003 WTO General Council Decision allowed countries without manufacturing capacity to import generics produced under compulsory license WTO notification mechanism under 30 August has not been used to date for the possible reasons: WTO notification mechanism under 30 August has not been used to date for the possible reasons: i)Mechanism deemed to be administratively burdensome i)Mechanism deemed to be administratively burdensome ii)Fears of adverse impact on aid and FDI; and ii)Fears of adverse impact on aid and FDI; and iii)lack of capacity to comply with Decision e.g. to prevent re-exportation iii)lack of capacity to comply with Decision e.g. to prevent re-exportation Nonetheless, it has allowed countries to negotiate lower prices with patent producing companies Nonetheless, it has allowed countries to negotiate lower prices with patent producing companies

Article 31 amendment of December August 2003 Decision formed basis of Article 31 amendment of TRIPs 30 August 2003 Decision formed basis of Article 31 amendment of TRIPs Agreed just few days before Hong Kong Ministerial Agreed just few days before Hong Kong Ministerial Controversial as it endorses a system that has not been proven to work Controversial as it endorses a system that has not been proven to work Exporting member must: Exporting member must: a) export entire production to importing member a) export entire production to importing member b) products must bear distinctive features b) products must bear distinctive features c) licensee must post on website quantities being supplied to each destination c) licensee must post on website quantities being supplied to each destination d) exporting member must notify WTO about specifics of license and conditions attached d) exporting member must notify WTO about specifics of license and conditions attached Both countries are expected to ensure that adequate compensation is paid in exporting member Both countries are expected to ensure that adequate compensation is paid in exporting member Ratification of Amendment deadline set for 2007, must get 2/3 WTO membership approval which is unlikely Ratification of Amendment deadline set for 2007, must get 2/3 WTO membership approval which is unlikely But for now, this is the only available mechanism But for now, this is the only available mechanism