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Christoph Spennemann, Legal Expert Intellectual Property Team

Development Dimension: Patents, Regulatory Test Data and their Impact on Public Health & Innovation Development Dimensions of Intellectual Property Rights Hanoi Foreign Trade University, 15 & 16 December 2008. Christoph Spennemann, Legal Expert Intellectual Property Team

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Christoph Spennemann, Legal Expert Intellectual Property Team

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  1. Development Dimension: Patents, Regulatory Test Data and their Impact on Public Health & Innovation Development Dimensions of Intellectual Property Rights Hanoi Foreign Trade University, 15 & 16 December 2008 Christoph Spennemann, Legal Expert Intellectual Property Team Division on Investment and Enterprise UNCTAD

  2. Overview of Presentation • Public health policy objectives • Access • Innovation • The impact of IPRs • On access • On innovation • Striking a balance between IPRs and public health: The TRIPS Agreement • Conclusions

  3. Public health policy objectives • Access to affordable medicines • Low income in developing countries • Lack of health insurance  out of pocket • Limited resources for publicly funded treatment programs • Development of innovative medicines • HIV/AIDS crisis (sub-Saharan Africa) • Other diseases predominantly affecting DCs (TB, sleeping sickness, river blindness)

  4. IPRs and access to medicines (1) • Drug development by industry is costly & risky  incentives needed to encourage R&D investment  TRIPS obligation to make patents available for drugs • Exclusive rights contribute to higher drug prices • OECD countries: safeguards (insurance schemes; competition law & policy to address IP abuses) • DCs: no or only few safeguards  access problem (IP as one among many factors)

  5. IPRs and access to medicines (2) • Concerns about access & price  WTO Doha Declaration on the TRIPS Agreement and Public Health • TRIPS should not prevent Members from taking measures to protect public health • TRIPS should be interpreted in a manner supportive of WTO Members’ rights to protect public health & access to medicines for all • Members are free to determine grounds for CLs • Members are free to (dis)allow parallel imports

  6. IPRs and pharmaceutical innovation (1) • Innovation requires R&D • IPRs as important incentives to recoup R&D investment (large companies) • Market failure: diseases predominantly affecting DCs • IPRs as important sources of capital for small firms (e.g. biotech start-ups): market potential • IP licensing as important means for small inventors to market invention

  7. IPRs and pharmaceutical innovation (2) But R&D requires skills/technological expertise: (+) in OECD; (-) in many DCs • Skills development through reverse engineering • Patent prevents reverse engineering of protected products (unless authorization/fees) • Most patents in many DCs held by foreigners • Obstacle to domestic learning; dependence on foreign expertise

  8. IPRs and pharmaceutical innovation (3) • EU: Despite patent incentive, decreasing number of innovative medicines (EU Commissioner Kroes) • January 2008: EU Commission launches investigation on potential IP abuses to keep generic competitors out of market (strategic litigation; abuse of dominance) • USA: low quality patents (not sufficiently new/inventive) • USA 2002: challenging pharmaceutical patents at success rate of nearly 75% (US Federal Trade Commission) • Many DCs: few expertise to challenge bad patents

  9. Recapitulation • IPRs important tools for drugs development and small business start-ups • But may block technological learning in DCs (reverse engineering) and follow-on innovation in any country • In addition, potential for abuse in OECD & DCs: strategic litigation • Impact of low quality patents on innovation & progress & competition

  10. Policy responses • How to reap benefits from IP protection while avoiding negative effects? • Importance of competition • as a source of innovation • as a means to maintain affordable prices • Promotion of competition through TRIPS flexibilities: leeway in implementation of minimum standards

  11. TRIPS Flexibilities for Public Health (1) • LDC transition periods • 2013 all TRIPS provisions • 2016 protection of pharmaceutical product patents & related processes; clinical test data • Window of opportunity for local producers in LDCs

  12. TRIPS Flexibilities for Public Health (2) • Parallel imports (IPR exhaustion) • Compulsory licenses (CL) • New system to facilitate drug exports to countries that lack domestic manufacturing capacities • Potential for generic drug producers in LDC-dominated trade agreements • Planned TRIPS amendment (draft Art 31bis)

  13. TRIPS Flexibilities for Public Health (3) • Patentability of medical substances • Extractions from nature = invention? • Product patent – process patent • New medical use of existing product = new product in patent sense? • Product patent – process patent – alternative means to protect incremental innovation/traditional medicine (use & pay systems after brief period of exclusivity) • Trivial changes in chemical structure = inventive step/non-obvious? • Alternative means to protect incremental innovation

  14. TRIPS Flexibilities for Public Health (4) • Exceptions for experimental use: Swiss Patent Law • Covers both scientific and commercial activities • Provided research leads to new knowledge about patented product • Patent protection limited to existing know-how, but does not block follow-on innovation

  15. TRIPS Flexibilities for Public Health (5) • Pharmaceutical Test Data: exclusive rights have impact on generic producers • Generation of own data is too expensive & time consuming • Apply also to off-patent products • May exceptionally last longer than patent • May complicate use of CLs

  16. TRIPS Flexibilities for Public Health (6) • Alternative to data exclusivity: use & pay system • No exclusive rights in data • Right to claim compensation from competitors (« use and pay ») • Available under EFTA – Korea FTA • Implementation: literature discusses at least 3 possible options how to calculate compensation

  17. TRIPS-Plus developments • Limitation of available TRIPS flexibilities through bilateral & regional free trade agreements (FTAs): «TRIPS-Plus» obligations (= higher levels of IP protection, reduction of public domain) • Examples: • Limitation of grounds for authorization of compulsory licenses • Exclusivity of pharmaceutical test data

  18. Conclusions • IPRs impact on public health policies • Access • Innovation • Importance of public domain for technological learning & competition • TRIPS provides tools to balance exclusive rights and competition • To maintain prices • To ensure innovation

  19. Contact Christoph Spennemann Legal Expert Intellectual Property Team Division on Investment and Enterprise (DIAE) UNCTAD E-mail: Christoph.Spennemann@unctad.org Tel: ++41 (0) 22 917 59 99 Fax: ++41 (0) 22 917 01 94 http://www.unctad.org/tot-ip

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