TRIPS, Doha and Access to Medicines: Recent Lessons

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TRIPS, Doha and Access to Medicines Recent
Lessons
Globalization, Intellectual Property Rights and
Social EquityChallenges and Opportunities of
Free Trade AgreementsBogotá, Colombia, July 21
22, 2004

• CARSTEN FINK

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Overview

• Introduction the pharmaceutical industry,
  intellectual property and drug prices
• TRIPS what came out of the Uruguay Round
• Doha Declaration on TRIPS and Public Health
• Paragraph 6 negotiations and the August 2003
  Decision
• Whats next?

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Introduction the pharmaceutical industry,
intellectual property and drug prices
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The pharmaceutical industry

• Long and expensive RD process
• Research, development, clinical testing,
  regulatory approval
• Risky process only a small share of promising
  chemical entities make it to the market
• Up to 10 years before drugs are marketed
• Without intellectual property protection, new
  chemical entities can easily be copied by
  competing firms

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Two main industry players

• Research-based companies
• Create intellectual property
• Multinational in scope, limited number of firms
• Generic drug companies
• Produce drugs of which intellectual property
  rights have expired
• Large number of firms, competitive market
  structure
• Efficient developing country producers

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Intellectual property and prices

• Main intellectual property instruments
• Patent exclusivity
• Protection of pharmaceutical test data
• Significant price falls documented upon expiry of
  pharmaceutical patents
• Example wholesale price of Pfizers blockbuster
  drug Prozac fell from 240 to less than 5 per
  bottle within six months after patent expiry

As reported by Frontline documentary The other
drug war, June 19, 2003
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Public policy considerations

• Trade-off between incentives to invent and
  competitive provision of drugs
• Optimal intellectual property policies may
  differ from country to country, depending on
  average incomes as well as nature and extent of
  health burden
• Effectiveness of intellectual property rights
• Market-oriented decision-making on RD
• Crude policy tool, exploitation of market power

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TRIPS what came out of the Uruguay Round
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TRIPS Agreement

• Negotiated during Uruguay Round of Trade
  Negotiations (1986-94)
• One of three multilateral pillar agreements
  that set out the trading rules of the World Trade
  Organization
• Provisions apply to all 147 WTO members and newly
  acceding countries
• International law, subject to WTOs dispute
  settlement provisions

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Key TRIPS obligations

• Article 27
• Patents to be awarded without discrimination
  among fields of technology
• Patents to cover both processes and products
• Patents to be protected for 20 years from the
  date of filing
• Article 39
• Protection of undisclosed test data against
  unfair commercial use, where such data is
  submitted to regulatory authorities

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TRIPS transition periods

• Developing countries without product patent laws
  have until January 1, 2005 to comply, but must,
  nonetheless, grant market exclusivity to newly
  invented pharmaceutical products
• Least developed countries were given until
  January 1, 2006 to comply.

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Where TRIPS is flexible

• TRIPS allows the use of compulsory licenses
• In case of emergencies, compulsory licenses can
  be granted without an attempt to obtain voluntary
  license from patent holder
• No obligation on legality of parallel imports
• Members are free to impose price regulations

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Doha Declaration on TRIPS and Public Health
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Context

• Issued at the WTO Doha Ministerial Meeting in
  2001
• Growing concern that TRIPS obligations could
  undermine access to medicines in poor countries
• Three elements
• Political statement
• Extension of deadlines for LDCs
• Negotiating mandate

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Political statement

• We agree that the TRIPS Agreement does not and
  should not prevent Members from taking measures
  to protect public health (paragraph 4).
• The Doha Declaration confirms key TRIPS
  flexibilities

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Extension of deadlines for LDCs

• Least-developed countries have until 2016 to
  implement the pharmaceutical patent provisions of
  TRIPS
• Do not need to enforce existing patent rights
  until 2016
• Deadline can be further extended

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Negotiating mandate

• Can countries with insufficient manufacturing
  capacities in the pharmaceutical sector make
  effective use of compulsory licenses?
• For example, Article 31(f) mandates that
  compulsory licenses shall be authorized
  predominantly for the supply of the domestic
  market.
• Paragraph 6 of Doha Declaration calls for an
  expeditious solution to this problem

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Paragraph 6 negotiations and the August 2003
Decision
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Paragraph 6 Negotiations

• Economic case for importation under CL is
  straightforward its about free trade
• Long and acrimonious negotiating process
• United States alone opposed December 2002
  compromise text, seeking to limit the scope of
  diseases to which importing mechanism can be
  applied
• Attempt to forge consensus in February 2003 failed

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August 2003 Decision

• Two elements
• Decision on Implementation of Paragraph 6
• Chairmans Statement
• Waives Article 31(f)
• No scope of diseases limitation, mechanism not
  limited to emergencies

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Other elements

• Voluntary opt outs by certain countries not to
  use the mechanism or to only use the mechanism in
  emergency situations
• Understanding that mechanism would not be used to
  promote industrial policy objectives
• Transparency obligations and safeguards to
  minimize risk of drug diversion
• More burdensome than necessary?
• Create opportunities for political abuse?

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Use of August 2003 Decision
Can the drug be manufactured domestically?
No
Is the drug protected by a patent in the
exporting market?
No
Has a compulsory license on the drug been issued?
No
Yes
Would a predominant share of production be
exported?
Need for August 2003 mechanism to import generic
drugs
Yes
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What's next?
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Evolving patent situation

• Generic sources still exist for virtually all
  medicines (in particular from India)
• Increased patent conflicts, use of compulsory
  licenses (e.g., Malaysia, Mozambique)
• Starting in 2005, the share of patented medicines
  in developing countries will rise
• What will happen in India?
• Will LDCs emerge as sources of generic drugs?

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Concern about bilateral agreements

• Recent US bilateral FTAs with Australia, Central
  America, Chile, Jordan, Morocco, Singapore
• Text of FTAs and legal analyses suggest
  TRIPS-plus provisions
• Protection of undisclosed test data
• Registration of pharmaceutical products
• Restrictions on parallel importation
• US Government maintains that bilateral FTAs do
  not compromise Doha flexibilities