Page 1 Implementation of the WTO Decision on TRIPS and Public Health Government of Canada August 2004

Page 2 Background Many developing and least-developed countries lack access to affordable pharmaceutical products necessary to respond to public health problems. Until August 30, 2003 WTO-TRIPS Agreement required that compulsory licenses only be issued “predominantly for the supply of the domestic market”, thereby limiting the ability to export licensed versions of patented pharmaceutical products. The WTO Decision allows its 147 member countries – this is a waiver, not an obligation – to establish compulsory licensing regimes for export of pharmaceutical products to countries that are unable to manufacture them domestically.

Page 3 WTO Decision – August 30, 2003 WTO Decision applies to: –Public health problems especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics; –Importing countries with insufficient manufacturing capacity. Moreover, the WTO states that: –The Decision should not be used to pursue industrial or commercial policy objectives; –The WTO and the patentee must be notified of any license; –Only the necessary amount of the pharmaceutical product can be produced, the entirety of which must be exported and be specially marked and labelled; –Licensees must publicly disclose the quantities and features of the pharmaceutical product; –Patentees must be compensated.

Page 4 Implementation by Canada As a major producer of generic drugs, Canada is establishing an international precedent by providing the foundation for a TRIPS compliant compulsory licensing for export regime. The regime required amendments to the Patent Act and the Food and Drugs Act. The regime won’t be operational until accompanying regulatory changes are in place.

Page 5 Challenges in Implementing WTO Decision Facilitate access to essential pharmaceutical products as quickly as possible while managing expectations. Ensure that the scheme contains sufficient incentives to encourage generic participation while leveraging brand name participation. Prevent erosion of patent protection: preserve investment climate and ensure continued introduction of new therapies onto the Canadian market. Respect Canada’s other international obligations (i.e. NAFTA), while reflecting as fully as possible the WTO Decision. Ensure that exported pharmaceutical products are as safe, efficacious and high quality as drugs for domestic consumption.

Page 6 Bill C-9 : Drafting Process Officials consulted stakeholders, including brand name and generic pharmaceutical industries and NGOs on the draft Bill. All stakeholders wanted specific provisions but supported the overall intent of the Bill: –Brands wanted: measures to prevent diversion and abuse by importing countries. –Generics wanted: protection from liability; a streamlined application process; Health Canada to review pharmaceutical products intended for export. –NGOs wanted: a government commitment to help developing and least-developed countries; no restrictions on non-WTO countries, diseases or pharmaceutical products.

Page 7 Bill C-9 : Key Features All least-developed countries are eligible importers and developing non-WTO member countries are eligible upon request. Every pharmaceutical product on the WHO list of essential medicines that was patented in Canada was “pre-approved” as eligible. Health Canada will review all pharmaceutical products for safety, efficacy, quality and distinguishing marks before export. An Advisory Committee will be created to recommend additional eligible products to Ministers.

Page 8 Bill C-9 : Key Features Patentees were given the right to ask the Federal Court to terminate a licence if the licensee has not met the terms and conditions or if diversion has occurred. Compensation for the patentee will be paid by the licensee and will be linked to the importing country’s level of development and the value of the contract. The regime contains provisions to ensure that companies participating in the regime do so in “good faith” and not for commercial purposes. Regime will be reviewed in two years.

Page 9 Required Importing Country Information Schedule 2 all LDCs Schedule 3 WTO members Schedule 4 WTO & non-WTO members Declaration of pharmaceutical product needed & required quantity YYY Declaration that product is not patented in importing country or that a compulsory license will be granted YYY Declaration of inadequate manufacturing capacity in importing country NYY Declaration of emergency in importing country NNY Declaration that anti-diversion measures from WTO Decision will be adopted Y (for non- WTO members) N

Page 10 Next Steps Bill C-9 received Royal Assent on May 14. The accompanying regulations are expected to be finalized later this year. Consultations with stakeholders have taken place regarding the proposed Regulations. There will be an additional opportunity to comment once the proposed Regulations are published in Canada Gazette, Part I.