Patents, access to medicines and the Patents, access to medicines and the

WTO’s TRIPs AgreementWTO’s TRIPs Agreement

Consultative meeting on incorporation Consultative meeting on incorporation of TRIPs Flexibilitiesof TRIPs Flexibilities

Morogoro, Tanzania 24 July 2006Morogoro, Tanzania 24 July 2006

Tenu AvafiaTenu AvafiaRegional Service centreRegional Service centre

UNDPUNDP

What does this have to do with patents What does this have to do with patents and the WTO TRIPs Agreement?and the WTO TRIPs Agreement?

What is the link between the TRIPs Agreement What is the link between the TRIPs Agreement and access to ARVs?and access to ARVs?

To answer this question, it is To answer this question, it is necessary to explore the relationship necessary to explore the relationship between Intellectual Property Right between Intellectual Property Right Holders and consumersHolders and consumers

Intellectual Property Rights / PatentsIntellectual Property Rights / Patents

What are patents?What are patents? A patent gives the inventor the exclusive A patent gives the inventor the exclusive

right to make, use, import, export, sell or right to make, use, import, export, sell or market an invention in the country where market an invention in the country where the invention is patented. the invention is patented.

patenting an invention gives the patent patenting an invention gives the patent owner a temporary monopoly over the owner a temporary monopoly over the invention.invention.

Patents governed by domestic and Patents governed by domestic and international law, particularly the TRIPs international law, particularly the TRIPs AgreementAgreement

Patent CriteriaPatent Criteria

In order to qualify for a patent, an In order to qualify for a patent, an invention has to meet threeinvention has to meet three criteria: criteria: • it must be something newit must be something new;;• it must not be obvious but actually involve it must not be obvious but actually involve

somesome sort of “inventive step,”sort of “inventive step,”• it must be usable. it must be usable.

Both products and processes can be Both products and processes can be patentedpatented

Indian generic companies rely on Indian generic companies rely on process patentsprocess patents

New use patents have been common New use patents have been common e.g. AZT or Viagrae.g. AZT or Viagra

Are patents necessary to stimulate R & D?Are patents necessary to stimulate R & D? Need to balance rights of inventor and consumerNeed to balance rights of inventor and consumer Drug research and development extremely costlyDrug research and development extremely costly Some companies claim that a new successful Some companies claim that a new successful

drug can cost as much as US$ 800 milliondrug can cost as much as US$ 800 million Actual costs unknown, US$150 million theoryActual costs unknown, US$150 million theory Companies would not engage in R&D if there was Companies would not engage in R&D if there was

no incentive for them to do so.no incentive for them to do so. Patent/temporary monopoly is reward to patent Patent/temporary monopoly is reward to patent

holder for investing money, time and resourcesholder for investing money, time and resources the WHO has noted that the WHO has noted that of the 1223 new drugs of the 1223 new drugs

developed between 1975 and 1996, only 11 were developed between 1975 and 1996, only 11 were for tropical diseasesfor tropical diseases

Are high costs of drugs justified?Are high costs of drugs justified? The high profit margins for patented drugs cannot The high profit margins for patented drugs cannot

be justified if we consider:be justified if we consider: drugs commercialized bydrugs commercialized by multinational multinational

companies have often been developed with companies have often been developed with significant publicsignificant public subsidies,subsidies,

There are often large tax breaks for R&DThere are often large tax breaks for R&D Often, the research is done by public institutions Often, the research is done by public institutions

like universities who sell patent to drug like universities who sell patent to drug companies at clinical trial phasecompanies at clinical trial phase

5 first line drugs invented by universities5 first line drugs invented by universities There are proposals in circulation to allow There are proposals in circulation to allow

governments to pay inventors for essential governments to pay inventors for essential medicines and then to own the IPRmedicines and then to own the IPR

UK Government suggestion of prize fundUK Government suggestion of prize fund

The problem with profit driven The problem with profit driven patent systempatent system

all of Africa accounts for the consumption of all of Africa accounts for the consumption of about 2% of global pharmaceuticalabout 2% of global pharmaceutical profitsprofits

a profita profit drivendriven system based on private patent system based on private patent rights provides an incentive to developrights provides an incentive to develop money money making making drugsdrugs

Even Indian generic companies are shifting Even Indian generic companies are shifting their efforts to Western diseases for greater their efforts to Western diseases for greater profitprofit

Initiatives other than patent incentives areInitiatives other than patent incentives are required to stimulate R&D into diseases required to stimulate R&D into diseases affecting mainly developing countries.affecting mainly developing countries.

Medical R&D Treaty proposalMedical R&D Treaty proposal

Who can afford a vigorous patent system?Who can afford a vigorous patent system?

Global Ranking of GDP in Global Ranking of GDP in 20032003

1 Luxembourg U$ 45 7781 Luxembourg U$ 45 778 4 USA U$ 36 7314 USA U$ 36 731 7 Japan U$ 31 4337 Japan U$ 31 433 22 Australia U$ 22 46222 Australia U$ 22 462 31 Portugal U$ 12 20031 Portugal U$ 12 200 66 Brazil U$ 2 61066 Brazil U$ 2 610 68 South Africa U$ 2 40868 South Africa U$ 2 408 107 Angola U$ 892107 Angola U$ 892 163163 Ethiopia U$ 191Ethiopia U$ 191

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Problems with “one size fits all” patent systemProblems with “one size fits all” patent system

CountryCountry Patents per Patents per million million (1998)(1998)

JapanJapan 994994

USAUSA 289289

NetherlandNetherlandss

196196

South South AfricaAfrica

2.52.5

BrazilBrazil 22

MexicoMexico 11

Graph clearly shows Graph clearly shows where a strong system where a strong system of patent protection is of patent protection is most advantageousmost advantageous

Participation in patent Participation in patent system has had largely system has had largely negative results for negative results for developing countries to developing countries to datedate

Few developing country Few developing country patent offices conduct patent offices conduct patent examinationspatent examinations

In most instances, In most instances, development objectives development objectives in African countries are in African countries are constrained by IP constrained by IP protectionprotection

Patents & Access to treatmentPatents & Access to treatment

Domestic laws that favour patented drugs over Domestic laws that favour patented drugs over generic drugs can stifle competitiongeneric drugs can stifle competition

Less competition = higher pricesLess competition = higher prices Higher prices = less accessHigher prices = less access Patents are one of the bottlenecks inhibiting Patents are one of the bottlenecks inhibiting

accessaccess Many countries still use patented drugs instead of Many countries still use patented drugs instead of

genericsgenerics Sustainability of programs sustained by donations Sustainability of programs sustained by donations

of patented drugs e.g. PEPFARof patented drugs e.g. PEPFAR

What is TRIPs?What is TRIPs?

Agreement on Trade-Related Aspects of Agreement on Trade-Related Aspects of Intellectual Property RightsIntellectual Property Rights

One of 3 principle agreements of the World Trade One of 3 principle agreements of the World Trade Organization (WTOOrganization (WTO ) )

Sets out rules for intellectual property rights that Sets out rules for intellectual property rights that all countries who belong to the WTOall countries who belong to the WTO

Not optionalNot optional Article 33Article 33 protects the rights of patent holders for protects the rights of patent holders for

a MINIMUM period of 20 years a MINIMUM period of 20 years patents must be individually registered in the patents must be individually registered in the

Country where protection is sought.Country where protection is sought.

TRIPs and GenericsTRIPs and Generics

If a particular drug is:If a particular drug is: Not patented; orNot patented; or ““off patent” i.e. patent has expiredoff patent” i.e. patent has expired someone else may someone else may legally make, import or sell legally make, import or sell

that drugthat drug or its equivalent or its equivalent Generic drugs are interchangeable versions of Generic drugs are interchangeable versions of

patented (brand name) drugs.patented (brand name) drugs. Generics almost always result in reduced drug Generics almost always result in reduced drug

prices prices Less R&D costs involvedLess R&D costs involved Quality varies but WHO EML includes several Quality varies but WHO EML includes several

genericsgenerics

Developing country views of TRIPsDeveloping country views of TRIPs

TRIPs only 10 years oldTRIPs only 10 years old Developing countries still coming to terms Developing countries still coming to terms

with TRIPs implementationwith TRIPs implementation Not aware of far reaching implications of Not aware of far reaching implications of

TRIPs during negotiationsTRIPs during negotiations Most developed countries did not Most developed countries did not

implement pharmaceutical patents until implement pharmaceutical patents until industries were developedindustries were developed

Patent rights were often ignored for Patent rights were often ignored for technological advances e.g. Wright technological advances e.g. Wright brothersbrothers

Options under TRIPs to improve Treatment Options under TRIPs to improve Treatment Access – “flexibility”Access – “flexibility”

Exclusions from or limitation of patentability Exclusions from or limitation of patentability Article 65 transitional period until 2016 for LDCsArticle 65 transitional period until 2016 for LDCs Pre-grant oppositionsPre-grant oppositions Parallel importationParallel importation General exceptions (e.g. General exceptions (e.g. BolarBolar provision and provision and

experimental use)experimental use) Anti-Competitive remedyAnti-Competitive remedy Compulsory Licensing (clarified by Doha Compulsory Licensing (clarified by Doha

Declaration)Declaration) 30 August Agreement30 August Agreement

Doha Declaration on TRIPs and Public HealthDoha Declaration on TRIPs and Public Health

Before Doha Declaration, every attempt to use Before Doha Declaration, every attempt to use TRIPs flexibility fiercely opposed by Research TRIPs flexibility fiercely opposed by Research based drug companiesbased drug companies

PMA v President of South Africa; US- Brazil WTO PMA v President of South Africa; US- Brazil WTO dispute are examplesdispute are examples

Doha Declaration adopted at a Ministerial Doha Declaration adopted at a Ministerial meeting, November 2001meeting, November 2001

TRIPS "can and should be interpretedTRIPS "can and should be interpreted and and implemented in a manner supportive of WTO implemented in a manner supportive of WTO Members' right to protect publicMembers' right to protect public health and, to health and, to promote access to medicines for all.“promote access to medicines for all.“

Officially allowed compulsory licensingOfficially allowed compulsory licensing What if you do not have manufacturing capacity?What if you do not have manufacturing capacity?

30 August 2003 Agreement30 August 2003 Agreement

Doha Declaration on TRIPs was not useful to most countries Doha Declaration on TRIPs was not useful to most countries in Africain Africa

Most African countries do not have manufacturing capacityMost African countries do not have manufacturing capacity 30 August 2003 WTO General Council Decision allowed 30 August 2003 WTO General Council Decision allowed

countries without manufacturing capacity to import countries without manufacturing capacity to import generics produced under compulsory licensegenerics produced under compulsory license

WTO notification mechanism under 30 August has not been WTO notification mechanism under 30 August has not been used to date for the possible reasons:used to date for the possible reasons:

i)i) Mechanism deemed to be administratively Mechanism deemed to be administratively burdensomeburdensome

ii)ii) Fears of adverse impact on aid and FDI; andFears of adverse impact on aid and FDI; and iii)iii) lack of capacity to comply with Decision e.g. to lack of capacity to comply with Decision e.g. to

prevent re-exportation prevent re-exportation

Nonetheless, it has allowed countries to negotiate lower Nonetheless, it has allowed countries to negotiate lower prices with patent producing companiesprices with patent producing companies

Article 31 amendment of December 2005Article 31 amendment of December 2005 30 August 2003 Decision formed basis of Article 31 30 August 2003 Decision formed basis of Article 31

amendment of TRIPsamendment of TRIPs Agreed just few days before Hong Kong MinisterialAgreed just few days before Hong Kong Ministerial Controversial as it endorses a system that has not been Controversial as it endorses a system that has not been

proven to workproven to work Exporting member must:Exporting member must: a) export entire production to importing membera) export entire production to importing member b) products must bear distinctive featuresb) products must bear distinctive features c) licensee must post on website quantities being supplied c) licensee must post on website quantities being supplied

to each destinationto each destination d) exporting member must notify WTO about specifics of d) exporting member must notify WTO about specifics of

license and conditions attachedlicense and conditions attached Both countries are expected to ensure that adequate Both countries are expected to ensure that adequate

compensation is paid in exporting membercompensation is paid in exporting member Ratification of Amendment deadline set for 2007, must get Ratification of Amendment deadline set for 2007, must get

2/3 WTO membership approval which is unlikely2/3 WTO membership approval which is unlikely But for now, this is the only available mechanismBut for now, this is the only available mechanism