PHA-Exchange> Third World Network ( TWN) Cancun Briefing 4 on TRIPS/Health

[Claudio]

From: "Beverley Snell" <bev at burnet.edu.au>
> The Third World Network (TWN) here provides a good explanation of  the
'new deal' on TRIPS and essential drugs. It is a bit long but  is clear.

> <http://www.twnside.org.sg> for full series
>
>
> THE NEW DEAL ON TRIPS AND DRUGS: WHAT DOES IT MEAN FOR ACCESS TO
MEDICINES?
>
> By Cecilia Oh

> Background
> The Doha Declaration confirmed, among others, the right of
> developing countries to use compulsory licences to override pat-
> ents on medicines, in order to allow generic drug manufacturers
> to produce cheaper versions of patented medicines. The Ministers
> at Doha could not however, agree on how to solve the problem of
> how those developing countries without domestic pharmaceutical
> manufacturing capacity could effectively use the compulsory li-
> cences. This became popularly known as the Paragraph 6 problem,
> named after that paragraph dealing with this issue in the Doha
> Declaration. The Declaration instructed WTO Members to find "an
> expeditious solution" to this problem by December 2002. On 16 De-
> cember, the Chair of the TRIPS Council came up with a text con-
> taining a proposed solution, which was accepted as a compromise
> by almost all Members except the US. The deadline was thus
> missed. Negotiations then stalled on the proposed solution, known
> as the December 16 text. Recently in Geneva on August 30, WTO
> Members finally adopted the December 16 text, together with an
> accompanying Statement by the Chair of the WTO General Council.
>
> Ministers in Cancun will now welcome the "Decision on the Imple-
> mentation of Paragraph 6 of the Doha Declaration on the TRIPS
> Agreement and Public Health". However, the reception to the Deci-
> sion may be more muted than that which greeted the Doha Declara-
> tion in 2001. Civil society organisations have expressed reserva-
> tions that the Decision and the Chair's Statement represent a
> compromise that may have the potential of pushing back the gains
> made at Doha.
>
> The Paragraph 6 problem
>
> The TRIPS Agreement allows the grant of compulsory licences (CL)
> to override patents, so that generic manufacturers may produce
> their cheaper versions of patented drugs. Countries with insuffi-
> cient or no domestic manufacturing capacity in pharmaceuticals
> are faced with a problem because there are no generic manufactur-
> ers to produce the drugs domestically. An option for these coun-
> tries is to grant a CL for the import of such drugs. However the
> supply of drugs for these countries to import may be limited and
> insufficient because of constraints placed by the TRIPS Agreement
> on the countries that have the capacity to produce and export the
> generic versions. The reason is that the TRIPS Agreement (Article
> 31(f)) requires that the production of generic drugs under a CL
> is "predominantly for the supply of the domestic market". This
> restriction would mean that exports of drugs produced under a
> compulsory licence is only possible only if the "predominant"
> portion of the production output has been supplied to the domes-
> tic market. This raises the concern that the non-predominant por-
> tion may not be sufficient for the needs of the importing country
> or countries.
>
> The agreed "solution"
>
> The "solution" is essentially a waiver of the Article 31(f) limi-
> tation on exports, which lifts the requirement of Article 31(f)
> that pharmaceutical products produced under a CL shall be "pre-
> dominantly for the supply of the domestic market". With this
> waiver in force, it means that a predominant portion or even the
> total amount of production under a CL could be exported to a
> country wishes to import.
>
> WTO Members also agreed to an accompanying statement by the Gen-
> eral Council Chair which spells out a number of "key shared un-
> derstandings" of how the Decision would be interpreted and imple-
> mented. The Chair's Statement is widely known to be the US' at-
> tempt to seek "comfort language" that would assuage concerns of
> its powerful pharmaceutical lobby that the Decision would allow
> generic manufacturers to gain a stronger foothold in the profit-
> able pharmaceutical market. The US had, in mid-August 2003, come
> up with its proposal for a Chair's statement that would enable
> them to agree to the December 16 text -- 8 months after the US
> stalled negotiations by withholding consensus after (almost) all
> WTO Members had agreed to it in December 2002.
>
> After hurried consultations in the few weeks before the end of
> August, Members agreed to the final version of the Chair's State-
> ment. The Statement confirms the common understanding of Members
> that the Decision should be used in good faith to protect public
> health purposes, and not for industrial or commercial policy ob-
> jectives. It also emphasises the need to prevent diversion of
> medicines from the markets for which they are intended -- elabo-
> rating on the trade diversion prevention measures that are re-
> quired to be taken by countries using the Decision.
>
> Will it work? And how?
>
> The objective of the Decision is to allow for countries wishing
> to import generic medicines to do so from a foreign generic pro-
> ducer. Where a patent is in force in the importing country on the
> drug in question, the importing country government will have to
> issue a CL to enable the import of the generic version of the
> patented drug. In the exporting country, the patent status of the
> drug is also relevant -- if a patent is in force, then the ge-
> neric manufacturer would have to obtain a CL to produce the drug
> and export it.
>
> In countries where there is no patent in force --for example,
> least-developed country (LDCs) Members need not allow for drug
> patents until 2016 - the importing country need not issue a CL.
> Similarly, in the exporting country where there is no patent in
> force, the production and export can take place without issue of
> a CL. However, there are very few countries in this situation --
> India, being a notable exception until 2005, when all countries
> will have to provide full patent protection. This is the reason
> why it was of crucial importance that a solution to Paragraph 6
> was found quickly.
>
> Therefore, in many cases, two CLs will have to be issued. Under
> the TRIPS Agreement and confirmed by the Doha Declaration, WTO
> Members have the right to determine the grounds for the grant
> compulsory licences. The standard procedural conditions for the
> grant of CL are set out in the TRIPS Agreement (Article 31),
> which includes the conditions that an application for a CL should
> be preceded by a failed attempt to obtain a voluntary licence
> from the patent holder and the payment of compensation to the
> patent holder. The Decision now modifies some of these require-
> ments and sets out another set of procedures to be complied with,
> when the waiver of Article 31(f) is required to allow for generic
> medicines made in one country to be exported to another.
>
> A compulsory licence to import
>
> So, when a developing country wishes to import generic medicines
, the importing country will have to do the following:
>
> (a) Notify the WTO of its intention to use the solution as an im-
> porter
> (b) Establish insufficient or no manufacturing capacity: > (c) Take
measures against trade diversion

> A compulsory licence to produce and export
>
> The importing country will need to locate a generic manufacturer
> that is willing and able to supply the medicines required. The
> generic manufacturer will require a CL if the medicine is under
> patent protection on its country. In theory, any country may
> grant a CL to its domestic generic manufacturer to produce and
> export to the importing country. It can be expected however, that
> developed country governments, such as the US, Canada and the EU,
> will not be granting CLs to their generic manufacturers, given
> the pressure of their pharmaceutical lobby.
>
> The CL must also be subject to the following conditions: 1) it is
> only for the amount required by the importing Member and must be
> exported in total to the importing country; 2) the products pro-
> duced under CL must be clearly identifiable through labeling or
> marking (e.g., special packaging, colouring or marking); and 3)
> the generic manufacturer is obliged, prior to shipment, to post
> on the website information on the quantities supplied to each im-
> porting country and the distinguishing features of product.
>
>
> For prices to be lowered to levels affordable to the majority of
> the developing country populations, it would make sense to en-
> courage competition between as many generic manufacturers as pos-
> sible. Competition from the introduction of generics would also
> bring down prices of patented medicines - and this has been dem-
> onstrated in many studies. However, the generic manufacturers
> would have to be able to achieve economies of scale or cost effi-
> ciencies to remain viable. And this would be dependent on large
> production runs - large enough orders - to stay in business. The
> trade diversion prevention measures - in requiring each batch of
> medicines to be manufactured in different shapes or colours - may
> prevent this from happening.
>
> Put it to the test
>
> It now remains to be seen whether or not developing countries
> will make use of the solution, and if it will in fact, make ac-
> cess to affordable medicines a reality. The Decision will have to
> be tested as to whether countries will try to use it, and whether
> it can be used successfully.
>
> TRIPS Agreement on public health and access to medicines are now
> better understood. International public opinion will have to be
> the judge of whether the declarations and decisions in the WTO
> have had a real impact on improving people's access to affordable
> medicines. If it is judged that these have not been effective, it
> may be that pressures will then begin for more far-reaching
> changes.