PHA-Exchange> WTO and TRIPS: Public Health Implications for Nepal

[shivraj at multitrade.org.np]

WTO and TRIPS: Public Health Implications for Nepal

Background:

Nepal’s membership to the WTO has opened many economic opportunities as
well as challenges for Nepal. Turning opportunities into reality itself is
challenging for Nepal being a least developed country with very poor
infrastructure, huge supply side constraints, and lack of competitiveness.
Its implications for various segments of society and sectors of the
economy are much debatable. Similarly, there is a wide spectrum of concern
of researchers and health policy experts on its public health
implications. While many international health policy commentators are
arguing that the WTO is one of the most influential international agencies
with respect to health; in Nepal yet the likely impact on health of the
organization and the policies it is promoting has not been given very much
attention.

WTO, as an instrument of trade liberalization, can affect public health in
multiple ways- both positively and negatively and also directly and
indirectly. It can affect the public health situation directly when a
disease crosses a border together with traded goods. It can also affect
public health indirectly, i.e., reducing tariffs may lead to lower prices
for medical equipment and health related products, or changing
international rules concerning patent protection may affect the prices of
medicines and vaccines. Moreover, there is a positive link between freer
trade and economic growth, which can lead to reduced poverty and higher
standards of living, including better health. However, health implications
of WTO can be case specific, which among others, depends on the existing
level of development, availability and access to health facilities,
country’s pharmaceutical production capacity, availability of human
resources and research and development (R&D) capacity.

Many WTO agreements including Technical Barriers to Trade (TBT), Sanitary
and Phytosanitary Measures (SPS), Trade Related Intellectual Property
Rights (TRIPS), Trade in Services (GATS) and Agriculture (AoA) have
significant importance for public health issues, especially for developing
and least developed countries. However, this article focuses only the
TRIPS agreement.

TRIPS is most debated agreements of the WTO. The agreement intended to
increase social and economic welfare through protection of intellectual
property, and transfer and dissemination of technology towards benefiting
producers as well as consumers. However, critics oppose these arguments
and argued that the agreement has many adverse implications for poor
nations’ poor people. Its implications for public health, farmers’ rights,
food security and bio-diversity are hotly debated.

Various articles of the agreement deal with patents and are particularly
relevant for public health. The agreement contains several provisions that
enable governments to implement their intellectual property regime in a
manner, which takes account of immediate and longer-term public health
considerations. It also provides for some flexibility in the
implementation of the agreement by allowing countries, under certain
conditions, to limit patent owners’ exclusive right, for instance by
granting compulsory licenses and allowing parallel importation of patented
products. Article 7 (objectives of the agreement), article 8 (that allow
member countries to formulate and adopt measures necessary to protect
public health and nutrition) and Doha declaration paves the more public
health-friendly interpretation of TRIPS by explicitly recognizing that
intellectual property rights are subservient to public health concern.

Public Health Implications of TRIPS:

Proponents of TRIPS argue that the protection of pharmaceuticals by
patents should lead to an increase in the flow of technology transfer and
foreign direct investment in developing countries like Nepal. It help to
end the "brain drain" from developing to industrialized countries caused
by the absence of protection for their inventions in their home countries.
It is argued that patents protection will encourage inventors to divulge
and to market their inventions that ultimately results in the development
of new drugs benefits the patients, therefore improved the public health
outcomes. Moreover, availability of wider range of better quality
products, including medicines will improve the welfare of general
population.

On the other hand many others, less optimistic opposed to the Agreement.
They argue that the prices of patented drugs and the amount of patent
royalties will increase with the strengthening and prolongation of the
patent holders’ monopoly and multinational firms will be free to export
finished or semi-finished products rather than transferring technology or
foreign investment directly to developing countries. Therefore, the
introduction and strengthening of patents regime for pharmaceutical
products will certainly not lead to an increase in R&D investment by
enterprises in developing countries, which have to contend with a lack of
technical infrastructure, and financial and human resources. Likewise, the
non-patentability of pharmaceutical products existing prior to the TRIPS
gave developing countries the opportunity to acquire basic technology
through reverse engineering before being able to invest in R&D.

The Way Forward for Nepal:

Being a member state of WTO, Nepal has an obligation to integrate into her
patent legislation the minimum standards (patents for 20 years, no
differential treatment between nationals and foreigners and reversal of
the burden of proof) established by the TRIPS agreement. By the year 2016
(or prior) Nepal will have to grant legal protection by patents to
pharmaceutical products. However, implications of Nepal’s WTO membership
in general and intellectual property protection in particular for public
health are inconclusive. Lose or gain will depend on many factors such as
consumer habits, market structure, public health situation, strength of
the local pharmaceutical industry, human resource availability to initiate
R&D, the legal environment, and the economic, trade and pharmaceutical
policies.

Basically, the protection of intellectual property benefits the persons
and countries that have innovative capacity that mostly depend on
availability of human resources and the level of infrastructure.
Therefore, to reap the benefits of WTO membership and patent protection,
Nepal must improve in human resource and infrastructure. In addition,
Nepal’s strategy for the production and distribution of drugs will be
incorporated into its national pharmaceutical policy, a component of the
national health policy. Similarly, greater interaction between trade and
health policy makers and practitioners and greater mutual awareness of
trade and health policies is needed.

Being a least developed member country of WTO, Nepal needs appropriate
policy measures and efforts to maximize its positive effects while
mitigating the negative ones. Ensuring health and trade policy coherence,
encouraging research and development activities, improving the capacity of
pharmaceutical production, and improvement in the availability of health
services are crucial to seize the opportunities opened by WTO membership
in the area of public health.



Shiv Raj Bhatt
Nepal Window II Trade Related Capacity Building Project
UNDP/HMG-N
PO Box 107
Phone: 5534646/5528514