Training Course on the Public Health Implications of Multilateral Trade Agreements, University of Lausanne (14-18 June 2004)

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1 Training Course on the Public Health Implications of Multilateral Trade Agreements, University of Lausanne (14-18 June 2004) TRIPS Agreement and Public Health Cecilia Oh Department of Essential Drugs and Medicines Policy World Health Organization

2 Structure of presentation WHO's perspectives on IPRs and access to medicines Introduction to patents TRIPS Agreement and the Doha Declaration - WHO's mandate and commitment TRIPS flexibilities and public health safeguards - what are they and how are they used? The Paragraph 6 problem and implementation of the 30 August Decision New challenges

3 IPRs and access to medicines: WHO perspectives Access to essential drugs is a human right Essential drugs are not simply another commodity Patent system is an incentive mechanism for research and development of new drugs Patents should be managed so as to protect interests of patent holder, as well as, safeguard public health principles WHO supports measures which improve access to medicines, including the use of TRIPS safeguards.

4 Patents Proprietary title Territoriality diversity and flexibility no international patent Granted by national Patent Office Annual renewal, payment of fees Patent duration variable but TRIPS now requires a minimum of 20 years patent term

5 Patents: The rationale Promotion of INNOVATION Encourage investment in R&D Public disclosure of invention dissemination of information and technical knowledge A time-limited 'monopoly' and the ability to determine price Negative right - preventing others from using, making, selling, marketing the product for a time-limited period Global debate is the patent system delivering?

6 Pharmaceutical patents Protection for inventions, and not medicines per se Protection may be for: a product; e.g., the specific molecule a process; e.g., manufacturing process the medical indication; e.g., effect of molecule a combination of products; e.g., a fixed dose combination of 2 or more molecules There could be more than one patent for a single medicine

7 Pharmaceutical patents Types of pharmaceutical patents: Pharmaceutical forms Analogy processes Combinations of known products Optical isomers Active metabolites Prodrugs New salts of known substances Variants of known manufacturing processes New uses for known products

8 Pre-TRIPS IPRs and patents public policy Development of different approaches for different needs: technology transfer vs. protection of technological base; enhancing competition and access vs. protection of investment Patent issues treated differently in each country Eligibility requirements, patentability criteria Scope of protection process and/or product patents Exceptions and exemptions Checks and balances vs. abuse IPRs

9 Patents and the TRIPS Agreement Minimum standards for patent protection But NOT a uniform international law or uniform legal requirements Patents to protect inventions, in all fields of technology Patentability criteria: novelty, inventive step, industrial application (TRIPS Art.27) Patents for products and processes Patents and the promotion of public interest?

10 WHO and country support Policy guidance and information support Capacity building, direct country support and regional awareness meetings Cooperation with international organizations Monitoring and analysing the effects of globalization on access to medicines

11 WHO Mandate Since 1999, WHA Resolutions have given broad mandate to WHO to: analyse, monitor and report on implications of globalization, IPRs/TRIPS, trade agreements for public health; Strengthen pharmaceutical policies and practices; and Assist in the implementation of TRIPS flexibilities and public health safeguards.

12 TRIPS Agreement and Doha Declaration WTO Ministerial Conference, Nov.2001 Patent and prices debate Clarification of TRIPS provisions Para 4: TRIPS "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and in particular, to promote access to medicines for all"

13 Developing country patent legislation Underlying principle: Strict standards of patentability and narrow scope of allowed claims Limiting scope of patentable subject-matter Standards strict requirements for patentability and breadth of patent commensurate with inventive contribution and disclosure made Facilitating competition restricting ability of patentees to prohibit others from building on or designing around patented inventions Extensive safeguards to ensure patent rights are not exploited inappropriately UK Commission on Intellectual Property Rights (2001)

14 TRIPS Agreement and Doha Declaration TRIPS-consistent policy options for affordable medicines: use of public health safeguards affirmed in Doha Declaration Government use Compulsory licences Parallel importation Exceptions to patent rights (e.g., Bolar exception)

15 Using the TRIPS flexibilities Straightforward, transparent and fast procedures Legislation that fully exploits the flexibility in TRIPS; e.g., for determining grounds for compulsory licensing and non-commercial use by government Clear, easy to apply, and transparent guidelines for setting royalty rates Appeal procedures that do not suspend execution of licence

16 Public non-commercial (government) use Article 31 TRIPS "Public non-commercial use" Government right (govt. agency, dept. or contractor) to use patent in the public interest Fast-track approach to compulsory licences Compensation to patent holder State practice: US and UK legislation

17 Public non-commercial (government) use United Kingdom Patents Act 1977, Section 55(1) Notwithstanding anything in this Act, any government department or any person authorized by a government department may, for the services of the Crown and in accordance with this section, do any of the following acts in the United Kingdom in relation to a patented invention without the consent of the proprietor, that is to say- (a) where the invention is a product, may- (i) make, use, import or keep the product, or sell or offer to sell it where to do so would be incidental or ancillary to making, using, importing or (ii) keeping it; or in any event, sell or offer to sell it for foreign defence purposes or for the production or supply of specified drugs and medicines, or dispose or offer to dispose of it (otherwise than by selling it) for any purpose whatever; (b) where the invention is a process, may use it or do in relation to any product obtained directly by means of the process anything mentioned in paragraph (a) above; (c) without prejudice to the foregoing, where the invention or any product obtained directly by means of the invention is a specified drug or medicine, may sell or offer to sell the drug or medicine;...

18 Public, non-commercial (Government) use United States: 28 USC 1498 (1997) (W)henever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation. Reasonable and entire compensation shall include the owner s reasonable costs, including reasonable fees for expert witnesses and attorneys, in pursuing the action... For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.

19 Parallel import Article 6 TRIPS Import and resale of patented product in another country, without consent of patent holder Exhaustion of rights: national, regional or international regimes State practice: S. Africa, Malaysia

20 Parallel import South Africa: Medicines and Related Substances Control Act No. 101 of 1965 (as amended by the Medicines and Related Substances Control Amendment Act 1997), Section 15C: (T)he minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public, and in particular may- (a) notwithstanding anything to the contrary contained in the Patents Act, 1978 (Act No. 57 of 1978), determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent; (b) prescribe the conditions on which any medicine which is identical in composition, meets the same quality standard and is intended to have the same proprietary name as that of another medicine already registered in the Republic, but which is imported by a person other than the person who is the holder of the registration certificate of the medicine already registered and which originates from any site of manufacture of the original manufacturer as approved by the council in the prescribed manner, may be imported; (c) prescribe the registration procedure for, as well as the use of, the medicine referred to in paragraph (b).

21 Parallel import Malaysia: Patents Act 1983, as amended by Patents (Amendment) Act 2000 Section 58A: Acts deemed to be noninfringement (1)It shall not be an act of infringement to import, offer to sale (sic), sell or use- (a) any patented product; or (b) any product obtained directly by means of the patented process or to which the patented process has been applied, which is produced by, or with the consent, conditional or otherwise, of the owner of the patent or his licensee. (2)For the purposes of this section, patent includes a patent granted in any country outside Malaysia in respect of the same or essentially the same invention as that for which a patent is granted under this Act.

22 Parallel import Argentina: Patent Law No of 1995 Article 36.c provides that the rights conferred by a patent shall have no effect against any person who... imports or in any way deals in the product patented or obtained by the patented process once the said product has been lawfully placed on the market in any country; placing on the market shall be considered lawful if it conforms to Section 4 of Part III of the TRIPS Agreement.

23 Exceptions to patent rights Article 30 TRIPS Specified and limited use of patent "Bolar" exception: use of patent prior to expiry for approval for generic product Others: research, experimental, production for export Automatically applicable if provided for in legislation no further conditions

24 Early working/bolar provision United States: 28 USC 1498 (1997) (W)henever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation. Reasonable and entire compensation shall include the owner s reasonable costs, including reasonable fees for expert witnesses and attorneys, in pursuing the action... For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.

25 Early working/bolar provision Canada: Patents Act, Article 55.2(2) It is not an infringement of a patent for any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) to make, construct or use the invention, during the applicable period provided for by the regulations, for the manufacture and storage of articles intended for sale after the date on which the term of the patent expires.

26 Compulsory licence Article 31 TRIPS Govt grant of licence to 3 rd party to use patent without consent of patent holder Right to determine grounds for compulsory licence NOT just for emergencies Conditions for grant: prior negotiations, compensation to patent holder, appeals process

27 Compulsory licence refusal to deal China: Patent Law of the People s Republic of China (1992), Chapter VI, Compulsory Licence for Exploitation of the Patent Article 48: Where any entity which is qualified to exploit the invention or utility model has made requests for authorization from the patentee of an invention or utility model to exploit its or his patent on reasonable terms and such efforts have not been successful within a reasonable period of time, the Patent Administration Department under the State Council may, upon the request of that entity, grant a compulsory licence to exploit the patent for invention or utility model.

28 Compulsory licence refusal to deal Germany: Patent Law (Text of December 16, 1980, as last amended by the Laws of July 16 and August 6, 1996) Section 24-(1): A non-exclusive authorization to commercially exploit an invention shall be granted by the Patent Court in individual cases in accordance with the following provisions (compulsory licence) if 1. the applicant for a licence has unsuccessfully endeavoured during a reasonable period of time to obtain from the patentee consent to exploit the invention under reasonable conditions usual in trade...

29 Compulsory licence public health and nutrition France: Law No of July 1, 1992 on the Intellectual Property Code (Legislative Part) (as last amended by Law No of December 18, 1996) Chapter III, Section 1, Article L : Where the interests of public health demand, patents granted for medicines or for processes for obtaining medicines or for processes for manufacturing such products may be subject to ex officio licences in accordance with Article L in the event of such medicines being made available to the public in insufficient quantity or quality or at abnormally high prices, by order of the Minister responsible for industrial property, at the request of the Minister responsible for health.

30 Compulsory licence public interest Denmark: The Consolidated Patents Act Publication of the Patents Act, cf Consolidated Act No. 824 of 3 September 1996 as amended by Act 972 of 17 December 1997 Section 47: When required by important public interests, any person who wishes to exploit an invention commercially for which another person holds a patent may obtain a compulsory licence to do so. Austria: Patent Law (Federal Law of 1970, as last amended by the Law of May 23, 1984, amending the Patent Law and the Law Introducing Patent Treaties) Section 36(3): If a licence for a patented invention is required in the public interest, any persons may apply for such a licence for the purposes of his business.

31 Using TRIPS flexibilities Mozambique: Compulsory licence No. 01/MIC/04 Notice by Ministry of Industry and Commerce, dated 29 March 2004 Compulsory licence to Pharco Mocambique Lda for the local manufacture of the 'triple compound' of lamivudine, stavudine and nevirapine. Triple compound is not marketed in Mozambique by international patent owners National interest to keep prices as low as possible Royalty due to patent owners shall not exceed 2% of the total turnover of the mentioned products.

32 Using TRIPS flexibilities Article 70 No. 1(b), Industrial Property Code of Mozambique (Decree No. 18/99 of May 4): 1. The invention may be exploited under authorisation given by the responsible Minister, without the consent of the proprietor of the patent, including use of the patent by the Government or by third parties, in the following instances: (a) When a potential user has endeavoured to obtain the consent of the patent under reasonable commercial conditions and negotiations have been unsuccessful (b) Use of the patent in a case of emergency or in any other circumstances of extreme urgency, either of an economic or a social nature, or for the development of other sectors that are vital to the national economy, when the circumstances so require.

33 Using TRIPS flexibilities Malaysia: Government use authorisation Notice of authorisation for exploitation of patented invention in Malaysia, by Ministry of Domestic Trade and Consumer Affairs, dated 29 October 2003 Importation of didanosine, zidovudine and lamivudine+zidovudine combination from India Only for supply to government (public) hospitals Ceiling price shall not be exceeded Compensation to be determined

34 Using TRIPS flexibilities Section 84 of Patents Act of 1983, amended as at 15 May 2002: (1) Notwithstanding anything containing in this Act- (a) Where there is national emergency or where the public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy as determined by the Government, so requires; or (b) Where a judicial or relevant authority has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive, The Minister may decide that, even without the agreement of the owner of the patent, a Government agency, or a third person designated by the Minister may exploit a patented invention.

35 Using TRIPS flexibilities Zimbabwe: Declaration of Period of Emergency (HIV/AIDS) Notice 2002 Declaration of period of emergency to enable the State or person authorised by the Minister: (a) to make or use any patented drug, including any antiretroviral drugs, used in the treatment of persons suffering from HIV/AIDS or HIV/AIDS related conditions; (b) to import any generic drug used in the treatment of persons suffering from HIV/AIDS or HIV/AIDS related conditions

36 Using TRIPS flexibilities Section 35 Patents Act (Zimbabwe) 35.(1) During any period of emergency, the powers exercisable in relation to an invention by a department of the State or a person authorized by the Minister under section thirty-four shall include the power to make, use, exercise and vend the invention for any purpose which appears to the Minister necessary or expedient (b) for the maintenance of supplies and services essential to life of the community; or (c) for securing a sufficiency of supplies and services essential to the well-being of the community, or

37 Factors hindering the use of compulsory licences Administrative and legal infrastructure Lack of adequate infrastructure in developing countries Capacity and expertise more technical assistance? Threat of multilateral or bilateral sanctions Compulsory licensing has to be "predominantly for the domestic market" Need for manufacturing know-how and sufficiently large market No co-operation from patent owner Economies of scale UK Commission on Intellectual Property Rights (2001)

38 Paragraph 6 problem A basic public health principle: " people of a country which does not have the capacity for domestic production of a needed product should be no less protected by compulsory licensing provisions (or indeed other TRIPS safeguards), nor should they face any greater procedural hurdles, compared to people who happen to live in countries capable of producing the product " Statement by WHO representative at TRIPS Council (17 September, 2002)

39 Elements of a solution to Paragraph 6: A public health perspective Full and broad coverage in terms of health problems and range of medicines Simple and speedy legal procedures in importing and exporting countries Equality of opportunities for countries in need of medicines Facilitation of multiplicity of suppliers of required medicines, from developed and developing countries Sustainability of quality supply at affordable prices Transparency and predictability of applicable rules in both developed and developing countries Stable international legal framework

40 August Decision: Elements August Decision Legal status Para 9: other flexibilities in TRIPS not affected; including other options for export and import Waiver shall terminate on date on which amendment to TRIPS takes effect Chairman's Statement Waiver of obligations General waiver of limitation to export Waiver in relation to Para 6 export within RTAs Waiver of compensation

41 August Decision: Elements Eligibility of countries WTO LDC Members Other notifying Members: qualified notification - only in emergencies/extreme urgency situations unqualified notification Purpose of use Import of pharmaceutical products under a compulsory licence No restriction on grounds for compulsory licence Exception in case of qualified notification Chair's statement Paragraph 6 of Decision, Paragraph 7 of Doha Declaration

42 August Decision: Elements Scope Covered products: "any patented product or product manufactured through a patented process of the pharmaceutical sector needed to address the public health problems " Procedural requirements for importing country Notification of intention to use Needed products, quantities Establishing lack of or insufficient manufacturing capacity Notification on intention to grant compulsory licence for import

43 August Decision: Elements Procedural requirements for exporting country Notification by exporting country Compulsory licence for production and export Conditions of compulsory licence Identification of products Anti-diversion measures Reasonable measures within Members means proportionate to their administrative capacities and to risk of trade diversion

44 Issues for consideration Limited application of Decision Does not preclude use of other avenues to facilitate export and import of generic medicines (e.g., Article 30) Export quantity constitutes non-predominant part Export under compulsory licence to remedy anti-competitive practices Exporting country not under compulsory licence Voluntary licence agreement Determining status of relevant patent(s) in importing and exporting countries Difficulty in obtaining patent data 2016 extension for LDCs Options

45 Issues for consideration Required changes to national patent laws Compulsory licence for imports Waiver of limitation on exports Waiver of compensation requirement in importing country Legal challenges at national level Grounds for grant of compulsory licence Compensation rate External factors Bilateral and/or regional trade obligations Data exclusivity

46 Implementation of August Decision Exporting countries Canada Right of first refusal profit cap List of medicines Eligible importing countries Norway EU Draft Regulation Importing countries?

47 New barriers to compulsory licensing? Inadequate or no changes to national laws Security of waiver? Amendment to Data exclusivity TRIPS-plus implementation of Article 39.3? sui generis regime of data exclusivity in bilateral agreements Bilateral and regional trade agreements implications for public health and access to medicines

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