Three Steps Closer to Cheap Drugs for the Poor

Image by Clever Cupcakes, Montreal, Canada

Image by Clever Cupcakes, Montreal, Canada

Following in the footsteps of Nepal and Tanzania, Ukraine also deposited its instrument of acceptance for the protocol amending the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) on March 16, 2016. The main goal of this amendment is to allow financially disadvantaged WTO member countries easier access to affordable medicine and healthcare. The protocol attempts to achieve this goal by allowing export countries to grant compulsory licenses (without the patent holder’s consent) to generic drug manufacturers, who will thereafter export the drugs into poorer countries that are unable to manufacture the medicines by themselves. Including the three new members that joined this March, there are currently 70 member countries that have accepted the protocol. Once formally accepted by two thirds of WTO members (totaling 162 as of November 30, 2015), the amendment will officially take effect.

The origins of this amendment can be traced back to the WTO Ministerial Conference in Doha in November 2001, during which ministers raised the issue of reconciling the dual goals of promoting public health (by extending access to existing medicine) and creating new medicines. This reconciliation echoes the central feature of TRIPS in striking a balance between the long-term objective of protecting intellectual property rights as a means to incentivize invention and creation and the short-term social objective of allowing the public (particularly the poor) to freely use existing inventions and creations. The World Health Organization (WHO), the World Intellectual Property Organization (WIPO) and the WTO have long engaged in a collaborative effort to ensure pharmaceuticals and other medical technology reach the world’s poor. Avenues to this end include pricing policies, taxes and import duties, procurement, regulation, technology transfer, local production, patents, compulsory and voluntary licensing, trade agreements, and competition policies, inter alia. The amendment discussed here addresses compulsory licensing: a built-in mechanism in the original TRIPS Agreement.

As a trilateral study published in 2013 shows, “most people in high-income countries live beyond the age of 70 and die of chronic diseases; these are also leading causes of death in middle-income countries, along with tuberculosis, HIV/AIDS and road traffic accidents; but in low-income countries, people predominantly die of infectious diseases and more than a third of all deaths are among persons aged under 15.” The three organizations have placed a large emphasis on cheap, easy access to medicine for poor nations (particularly for treatment of communicable diseases such as HIV/AIDS and malaria). As noted in the 2013 report “[a]ffordable prices are a critical determinant of access to medicines, especially in countries where public health sector is weak,” and the key driving factor of lower drug prices is generic competition.

The legal barrier to that goal under the TRIPS framework is the limitation set forth by Article 31(f) of the TRIPS Agreement, which states that “other use without authorization of the right holder” shall be authorized for the “supply of the domestic market of the Member authorizing such use.” This has significantly thwarted opportunities for lesser developed countries that are unable to produce the medicines themselves to obtain cheap supply via imports from countries that are able to produce generics. Although member countries have agreed that the TRIPS Agreement does not and should not prevent countries from taking measures to protect public health, they were deadlocked over how and to what extent protection of intellectual property should give way to public health concerns.

The preliminary phase of this tug of war finally ended in August 2003, when the General Council adopted the Decision on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, which allowed any member countries to export generic pharmaceutical products made under compulsory licenses into importing countries lacking production capacity. Theoretically speaking, any WTO member is eligible to be a beneficiary of the system as an “eligible importing Member;” however, in practice, several developed countries have voluntarily announced that they will not use the system to acquire cheap generics (see footnote 3 to paragraph 1(b) of the decision), and at least 11 other countries have expressed that they would use the system only for national emergencies or other circumstances of extreme urgency.

To address the fear that the decision might lead to abuse and undermine patent protection, former General Council chairperson Carlos Pérez del Castillo, issued a statement to affirm the mutual understanding among members that the system shall be implemented in good faith to protect public health and not used to pursue industrial or commercial objectives. He further affirmed that the prevention of diversion to unintended markets is a common objective (as stated in paragraphs 4 and 5 of the decision) and shall be implemented through reasonable measures such as through the labeling system in paragraph 2(b)(ii). He also stressed the importance of transparency when utilizing the system (hence notification requirements set out in paragraph 2(a)) and that member countries should seek to resolve all controversies arising from use of the system expeditiously and amicably.

The next milestone of this reform occurred in December 2005, when the General Council reached a formal Decision to Amend the TRIPS Agreement, the effect of which was to formally incorporate the 2003 decision into the TRIPS Agreement. The compulsory licensing mechanism along with peripheral designs—i.e., notification requirements, diversion prevention measures, regional trade system development, annual reviews by the TRIPS Council, and remuneration waivers for importing countries (which were all touched upon in the 2003 decision)—will be expected to take effect as soon as two thirds of the WTO’s members have ratified the change. This is essentially the first time in history a core WTO Agreement is to be officially amended, showing the importance WTO members attach to the promotion of global health. As we cross the finish line of this significant reform, new challenges are certain to surface, and it would be worth observing whether this system effectively enhances public health or is alternatively susceptible to commercial abuse, and poses a threat to the transnational intellectual property protection we have sought hard for.

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