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GUEST COLUMN |
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| Patents and Access
to Medicines. What can be done? |
| Martin Khor |
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There was a public outcry a
few years ago over how the monopoly granted by
patents caused excessively high prices for HIV/AIDS medicines.
The cost of
treatment using patented drugs was US$10,000-15,000 per
patient per year in developed countries, whereas some
generic producers in developing countries were able to
provide treatment for as low as $140. If developing countries
are able to make or import these generic drugs at cheaper
cost, it would significantly increase access to medicines.
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| The Trade-Related Intellectual Property Rights (TRIPS) Agreement
in the World Trade Organization in 1995 made it compulsory for
WTO members to include medicines in their regime for product
and process patents. Yet, while mandating that WTO members have
to allow patenting for medicines, the TRIPS Agreement does contain
some flexibility. For example, if patented drugs cost too much,
a government can take measures such as issuing a compulsory
license to an agency or company to manufacture or import a cheaper
generic version of that patented drug. |
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At the WTO's Ministerial Conference in 2001,
the Doha Declaration on the TRIPS Agreement and Public Health
was
adopted. It reaffirmed and clarified the flexibilities available
under the TRIPS Agreement, and proclaimed: "We agree that
the TRIPS Agreement does not and should not prevent Members
from taking measures to protect public healthEe
affirm that the Agreement can and should be interpreted in a
manner supportive of WTO Members' right to protect public
health and in particular, to promote access to medicines for
all." |
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| If the Doha Declaration is to be of benefit, developing countries
now have to establish appropriate provisions in their national
patent legislation, fully exercising the options that are provided
in the TRIPS Agreement. They also need national policies aimed
at providing access to medicines for all. |
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| A manual to navigate TRIPS |
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With this in view, the Third World Network (TWN) organized
several meetings involving legal experts, NGOs and policy
makers to discuss the options available to developing countries
for policies and legal provisions that are oriented to meeting
public health concerns. The outcome of these meetings was a
Manual on Good Practices in Public-Health-Sensitive Policy Measures
and Patent Laws, recently published by TWN. |
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The Manual is a 'how-to' book for developing
countries, providing policy options to import, produce and export
affordable
medicines through measures that are consistent with the TRIPS
Agreement; model legal provisions for national patent
laws that are sensitive to public health concerns, and consistent
with the TRIPS Agreement; and proposals for an appropriate institutional
and administrative framework to implement the proposed patent
laws and policy measures, including for compensation to the
patent holder. |
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| Importing drugs |
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A country can import a generic version of a patented
product by issuing a compulsory license to a company or agency
to import the drug, and the government has the freedom to determine
the grounds upon which such licenses are given.
The imported drug can be from a country in which the drug is
not patented, or in which the drug is patented (in which
case the exporting country also has to issue a compulsory license).
The applicant first must negotiate with the patent
holder to obtain a voluntary license and, if that fails, then
a compulsory license can be granted. Adequate compensation
must be paid to the patent holder. |
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A generic version of the patented drug can also
be imported for 'public, non-commercial use' by the government.
Under this 'government use' procedure, the prior consent of
or negotiations with the patent holder is not required, but
adequate compensation has to be paid. This method is suitable
if the imported drug is to be used by the government. |
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There can also be 'parallel importation' of a
patented product (i.e. not the generic version) from another
country
where the same patented product is being sold at a lower price
than in the importing country. This is allowed under Article
6 of the TRIPS Agreement on exhaustion of rights, and the Doha
Declaration re-affirms this. In this case, there is no need
for an importer to obtain a compulsory license, nor to pay compensation
to the patent holder. |
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| Local manufacture |
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| If a drug is patented in a country, generic versions
of the drug can be locally manufactured by a local company or
agency that has been granted a compulsory license. But before
applying for a compulsory license, the applicant must first
make a good faith effort to negotiate with the patent holder
for a voluntary license. This requirement, however, does not
apply if the compulsory license is issued on grounds of public
non-commercial use, for national emergencies or situations of
extreme urgency and to remedy anti-competitive practices. Compensation,
however,must be paid to the patent holder. |
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The government can also assign to a public or private agency
the right to locally manufacture a patented product
without the patent holder's permission, provided it is used
for a public non-commercial purpose. Compensation has to be
paid. |
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| Exporting drugs to low-capacity countries |
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A local producer of generic versions of patented products
under a compulsory license or government-use provision may
export a portion of its output. However Article 31(f ) of the
TRIPS Agreement requires that this production shall be "predominantly
for the supply of the domestic market", and thus there
is a limit to the amount that can be exported. This
restriction does not apply when the compulsory license is granted
to correct anti-competitive practices. |
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This restriction is a problem for developing
countries with insufficient or no drug manufacturing capacities,
as they
may find it difficult to import the required medicines since
there is a limit on the amount that potential exporting countries
can supply to them. |
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| The Doha Declaration asked the WTO to find an 'expeditious
solution'. In August 2003 the WTO General Council adopted a
decision on a 'temporary solution' in the form of an interim
waiver to the Article 31(f ) restriction, such that countries
producing generic versions of patented products under compulsory
licenses would be allowed to export the products to eligible
importing countries without having to limit the exported amount. |
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| However, the decision also obliges importing
and exporting countries using the waiver process to undertake
measures and fulfill several conditions, which are difficult
to comply with. |
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| The importing country has to notify the WTO about
the drug that it requires and confirm it has insufficient or
no manufacturing capacities to produce the drug. Finally, it
must take measures to prevent the re-exportation of the products.
The generic manufacturer in the exporting country will need
a compulsory license and the exporting country must notify the
WTO of the compulsory license and its conditions. The products
must be labeled or marked through special packaging and shaping
of the products. |
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| The waiver is an 'interim solution' and a 'permanent
solution' was to be found by the middle of 2004, but it is unlikely
this deadline can be met. |
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| Other measures |
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| The policy options have to be backed up with the appropriate
provisions in the national patent laws.The Manual provides model
provisions for parallel importation, compulsory licensing and
government use, as well as exceptions to patent rights, accompanied
by detailed explanatory notes and examples of the relevant legal
provisions in various countries. |
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| Finally, the Manual has a section discussing
the establishment and operation of an institution (or competent
authority) to process compulsory licenses. It also examines
how 'adequate remuneration' or compensation to the patent holder
can be fixed, and the experience of various countries is examined. |
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Martin Khor is Director of the Third World
Network, which is involved in development and environment issues.
The Manual on Good Practices in Public-Health-Sensitive Policy
Measures and Patent Laws is available through TWN at
twnet@po.jaring.my. |
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