Why is protecting pharmaceutical patents a controversial issue in DCs ?

1. Whyisprotectingpharmaceuticalpatents a controversialissue in DCs? • PoorDCs can neither produce noraffordtobuypatenteddrugs. • Theyneedgenericmedicines, in particular the genericversionofessentialdrugs. • Otherwise, their people continue todie, evenof common diseases. • Genericdrugs = drugs sold under the nameof the chemicalingredientratherthan a trademark

2. Pharmaceutical Companies v. Poor Countries • Pharmaceutical Companies = the patent holders • Poor Countries = Countries lacking local pharmaceutical manufacturing capacity and with insufficient health budget • In theory, their interests should be complementary rather than conflicting. • Conflict arises as the price of medicines, even of essential drugs, is too high, in respect of financial capacities of poor countries.

3. Why is the price of medicines high? • The price is high because of pharmaceutical patents. • A patent holder is free, usually for 20 years, to decide how, when and at what price to market its product. • Thus, companies which are able to produce and sell cheap generic drugs equal to patented ones cannot do so for a long time.

4. What are essential drugs? • According to the WHO definition, they are «those drugs that satisfy the health care needs of the majority of the population; they should therefore be available at all times in adequate amounts and in the appropriate dosage forms, and at a price that individuals and the community can afford». (WHO, The Use of Essential Drugs, WHO Technical Report Series 895, Geneva, 2000)

5. Common methodsusedbyStatestocircumventpharmaceuticalpatents • Denialofproductpatents • Referenceto a Bolarexception • Parallelimportation • Compulsorylicensing

6. Bolar Exception Without the permission of the patent holder, a company is permitted to do tests and/or trials on a patented drug in order to gain regulatory approval before the expiry of the patent and to put the generic version on the market as soon as the patent expires.

7. Parallel importation Without the permission of the patent holder. Parallel importers buy at a low price in one country and import (it) into another country whose home market has a higher price for the drug. This method is based on the exploitation of the differences in prices fixed by a patent holder in the markets of different States. Such differences can be considerable.

8. When does parallel importation become a public issue? If the importing State’s patent law provides that the rights of the patent holder have been exhausted when its patent has been placed on the market in another State with its consent, the patent holder cannot exercise its rights in the importing State to prevent parallel importation.

9. Compulsory Licensing • A State public body or agency grants the permission to copy a patented drug to meet local needs before the patent expires and without the consent of the patent holder. • Sometimes, the application for such use of a patent can bring about an acceptance by the patent holder to grant a voluntary licence.

10. The TRIPs Agreement patent regime in brief The Agreement provides for - uniform patent protection for 20 years from the filing date of a patent application, according to minimum standards; - process patents as well as product ones, - different transitional periods: 1 year for ICs, 5 years for DCs and 11 years for LDCs. The latter period has been extended until 2016, this refers only to pharmaceutical patents.

11. Flexibility of the TRIPs Agreement • The Agreement provides for some exceptions and safeguards. • In particular, the fact that it does not regulate the resort to a Bolar exception or to parallel importation implies that such practices are, in principle, permitted. • Art. 31 allows a WTO Member to resort to compulsory licensing, although under strict conditions.

12. Art. 31 is controversial. Why? Because it provides that public non-commercial use of a patent can «be authorized predominantly for the supply of the domestic market of the Member authorizing such use» (Para. f), unless «such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive» (Para. k).

13. What does Art. 31 (f) mean in practice? States which are specialized in the generic production of some essential drugs cannot grant c.l. to export them to poor countries. LDCs cannot grant compulsory licensing as they lack local pharmaceutical manufacturing capacity. Conflict of interests = the WTO trading system does not seem to contribute to humanitarian and development goals.

14. The 2005 Amendment to Art. 31 (f) In brief, the new text of Art. 31 (f) provides that «… the obligations of an exporting Member under Art. 31 (f) shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) …».

15. Limits of the Amendment • It applies apparently to any «pharmaceutical product», but this is not true. It refers to «the public health problems» which are recognized in Para. 1 of the 2001 Doha Declaration on the TRIPs Agreement and Public Health, that is those associated specifically to HIV/AIDS, malaria and TB. • ICs have committed themselves not to act as importing countries, while some DCs, like China, Mexico and Korea, have stated that they would resort to the Amendment only in case of national emergency or other possible circumstances of extreme urgency.

16. The issue of the entry into force of the Amendment • The Amendment has to be ratified by 2/3 of the WTO Members, that is 102 Members. • Initially, it was established that ratification was to be achieved by 1/12/2007. In December 2007 the deadline was extended to 31/12/2009 and probably it will be extended once again.

17. List of WTO Members that have ratified the Amendment - United States (17 December 2005) • Switzerland (13 September 2006) • El Salvador (19 September 2006) • Rep. of Korea (24 January 2007) • Norway (5 February 2007) • India (26 March 2007) • Philippines (30 March 2007) • Israel (10 August 2007) • Japan (31 August 2007) • Australia (12 September 2007) • Singapore (28 September 2007) • Hong Kong, China (27 November 2007) • China (28 November 2007) • European Communities (30 November 2007) • Mauritius (16 April 2008) • Egypt (18 April 2008) • Mexico (23 May 2008) • Jordan (6 August 2008) • Brazil (13 November 2008) • Morocco (2 December 2008) • Albania (28 January 2009) • Macau, China (16 June 2009) • Canada (16 June 2009) • Bahrain (4 August 2009) • Colombia (7 August 2009) • Zambia (10 August 2009)

18. From the list it can be noted that • 1. So far, only 26 Members have accepted the Amendment (only 25% of the needed 2/3). • 2. The EC ratification also binds its 27 Member States. Thus, the percentage that have ratified it is not 25%, but higher about 32%. • 3. Many poor African countries have not ratified the Amendment yet. • 4. ICs and DCs which have specialized in the production of generic drugs have ratified it.

19. How useful is/was the Amendment? Is it really what poor countries need? • Probably, the fact the Amendment came about to deal with the 3 afore-mentioned diseases is one of the reasons why it does not seem to be what DCs, in part. LDCs, need. • Another reason could be the general reluctance of States to declare their needs. • Another reason could be that the procedural mechanism provided for by the Amendment is too complex.

20. All States should take into consideration that • To gain real control of diseases in poor countries, more financial resources and technical cooperation are necessary. • LDCs need support not only to pay royalties, but also to promote prevention. International initiatives, such as the Global Fund to Fight AIDS, malaria and TB and the PRGF, are not being implemented to the full potential.

21. Is the TRIPs Agreement part of the problem or of the solution? • Why did ratification by industrialized WTO Members and emerging countries, such as Brazil and India, come so quickly? Was it simply economic consideration on their behalf? • At any rate, the existence of the amendment is still a bargaining tool for LDCs, inter alia, to promote voluntary licensing.