ICCAIPLA September 13, 2002 The Future of TRIPs: Impact of the Doha Health Declaration

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ICC/AIPLA - September 13, 2002The Future of
TRIPs Impact of the Doha Health Declaration

• The view of European Industry
• David Rosenberg, Manager Industry Affairs,
  Corporate Intellectual Property, GlaxoSmithKline

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Topics to be covered

• Background to the 31.f issue
• Solutions proposed
• Possible effects of the solution
• Conclusions

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Disenchantment pre-Doha

• Globalisation
• Perceptions about the WTO - substance (favours
  the North) and procedures (Northern domination)
• Perceptions about TRIPs - cost and benefit, TK,
  one size fits all
• Perception of TRIPs as a contributor to the
  global health crisis by requiring patents for
  medicines

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The health crisisDisease Deaths pa New cases
pa in dev.world

• TB 1.9 million 8.8 million 84
• Malaria gt 1 million 300 million c. 100
• HIV/AIDS 3 million 5.3 million 92 (40
  million HIV)

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TRIPs is the problem

• High prices are a key factor restricting access
• Generic competition would reduce prices and
  increase access
• Generic competition is a key part of the solution
• Patents prevent generic competition
• Therefore, TRIPs is the problem

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The effect on the Doha Ministerial

• Developing countries suspicious of a new Round
  and growing in negotiating confidence
• US and EU wanted a new Round but not to give up
  protection of key interests e.g agriculture and
  textiles
• TRIPs became topic of media focus and the key
  element in a compromise

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CL for export - the 31.f problem and the Doha
mandate

• Doha stated no limits in TRIPs on grounds for
  compulsory licensing
• Art 31.f - CL must be predominantly for the
  supply of the domestic market
• WTO Members with insufficient or no
  manufacturing capacities in the pharmaceutical
  sector could face difficulties in making
  effective use of compulsory licensing under
  TRIPs
• Solve it by end 2002

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Mechanism for implementing the solution - 1

• Article 30 interpretation - cant be done as
  effectively amends 31.f solution will not be
  effectively restricted - developing world
• Delete Article 31.f - Africa Group
• Interpretation and deletion will have effects
  on other industries beyond Doha mandate
• Amendment of TRIPs to revise Article 31.f -
  Pandoras box delay - EU

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Mechanism for implementing the solution- 2

• Decision/Moratorium on dispute settlement under
  strictly defined conditions - political
  acceptability?
• Waiver of 31.f obligations under strictly defined
  conditions - political acceptability?
• UNICE (and US) support either. Pharmaceutical
  industry supports waiver

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Countries of export, transparency, and diversion

• Exporting countries to be developing countries
  only - US agree, EU undecided, opposed by some
  others
• Solution must operate in a transparent manner -
  patent owner, WTO and WTO Members should know
  whats happening where - seems to be accepted in
  principle but details unclear
• Diversion of products must be prevented - yes,
  but how? Additional obligations on WTO Members?

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Members with insufficient manufacturing
capacities in the pharmaceutical sector

• Active ingredient or final formulation?
• Ability to manufacture pharmaceuticals (the Doha
  mandate) or the particular product?
• Do states or companies have this capacity? What
  if company has it but wishes to produce other
  products?
• EC - product by product approach, ignoring patent
  owner capacity - states to self-select according
  to (as yet undefined) objective criteria
• Will this criterion ultimately comprise any
  practical limitation?

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Which countries should be allowed to import? - 1

• 1. All?
• 2. All developing?
• 3. All least developed and the poorest
  developing?

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Which countries should be allowed to import? - 2

• Industry - only least developed and poorest
  developing countries (with properly defined and
  restricted manufacturing capacity criteria) will
  be acceptable
• US and EU appear to agree but not clear
• Many developing countries appear to want all
  developing countries with meaningless
  manufacturing capacity criteria
• Will the US and EU accept this?

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What should the disease scope be?

• Industry - HIV, TB, malaria and other epidemics
• Para 1 Doha Declaration gaining support - public
  health problems afflicting many developing and
  least developed countries, especially those
  arising from HIV/AIDS, TB, malaria and other
  epidemics
• What does this mean? Everything except
  lifestyle diseases? Brazil wants at very
  least constructive ambiguity

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Potential outcome and legal effect of a broad
solution

• TRIPs will permit CL for export for all but
  lifestyle products to vast majority of
  developing and least developed countries
• For pharmaceuticals, the rights conferred by
  TRIPs for most products and most countries in the
  developing world will be reduced to a right to a
  small royalty

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Will this actually help alleviate the access
problem?

• Only if patents are a barrier to access
• Only if generics supply greater quantities of
  products at significantly reduced prices
• And only if the solution does not cause other
  harm

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Are patents a barrier to access?

• gt95 of drugs on WHO EML are not patented but 30
  of those who need them dont get them. 3 million
  deaths p.a. caused by TB and malaria cannot be
  caused by patents
• Most ARVs not patented in most of Africa, but
  most patients who need them dont get them
• No patents in India - several local generic ARV
  producers - 580,000 patients need ARVs - 20,000
  patients get them

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Will generics significantly increase supplies?

• India has said it does not want to be the social
  supplier to the developing world
• Head of Brazils HIV programs says doubling of
  Brazils ARV production would make minimal impact
  on the 6 million people currently needing ARVs
  and drain resources needed internally for e.g.
  malaria
• The evidence to date of a generic solution does
  not suggest it will work

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Poverty is the real problem

• gt50 of world population lives on lt 2 per day
• Many developing countries spend lt 10 per year
  per head on healthcare
• Although malaria TB can be treated at low
  annual cost, they are not
• HIV treatment costs 1-3 per day
• Lack of political will and poverty cause
  inadequate infrastructure
• Without new funding (which the North appears
  reluctant to give), the poorest countries and
  their citizens cannot afford drugs at any price
• Without opening up Northern markets to Southern
  goods (which the North is reluctant to do),
  poverty is unlikely to be alleviated

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The effect of a broad solution

• As the poorest cannot afford at any price, and as
  generics do not satisfy demand now, long-term
  significant increase in patients being treated
  with affordable generics with blanket compulsory
  licensing unlikely
• Generic supplies will, however, undermine the
  profitable private markets (comprising wealthier
  patients) of the RD industry, particularly in
  the poorest countries where there is least public
  healthcare

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Consequences in poorer country markets?

• Reduced incentive to expend resources needed to
  launch new products. If no launch by innovator,
  no market for generic
• Reduced ability of generics to launch as no local
  regulatory approval to piggy back
• Reduced incentive to provide local employment,
  product support and medical education
• Reduced product access and infrastructure

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The need for RD incentives

• IP protection is key to bringing forward new
  medicines, vaccines and diagnostics urgently
  needed for the health of the worlds poorest
  populations Kofi Annan, April 2001
• Partnerships between the public and private
  sectors can provide incentives for pharmaceutical
  companies to invest in the research and
  development of new tools to fight the diseases of
  poverty. Such incentives must create confidence
  that there will be viable markets for more
  effective and affordable tools when they are
  developed. Scaling up the response to infectious
  diseases - A way out of poverty, WHO, 2002

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Effect of a broad solution on future RD

• Without strong IP (or some other form of
  exclusivity) there will be no confidence of
  viable markets
• A broad solution will substantially undermine
  the exclusivity of the rights provided by TRIPs
• If no exclusivity in developing world, where is
  the incentive to spend the 800 million needed
  to bring new products for the developing world to
  market?
• By weakening IP, reduce incentive for technology
  transfer, an increasing demand of the developing
  world

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In summary..

• Patents arent a barrier and Article 31.f is not
  a real problem
• A broad solution to an unreal problem will not
  contribute to solving the access problem, but may
  even make it worse
• The true solution involves all sectors of our
  global society working together in new kinds of
  partnerships to find new solutions to the
  problems of access and poverty, and the North
  providing more funding to deal with the existing
  access crisis

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And what of 31.f?

• A broad solution cannot be positive and may
  well have negative effects on access, technology
  transfer and RD
• It is a solution only for a political problem
  which only helps politicians, not patients
• The solution must preserve the IP which is
  needed for new medicines
• Politicians must rise above the rhetoric and
  political expediency and do the right thing
• Limit the scope of the solution and increase
  funding