Workshop on the TRIPS Agreement and Public Health Geneva

Transcript Workshop on the TRIPS Agreement and Public Health Geneva

LLM UNIVERSITY OF TURIN – STUDY VISIT 04 OCTOBER 2011

Impact of patents on access to countries

Jayashree Watal Counsellor Intellectual Property Division WTO

OUTLINE OF PRESENTATION

I. TRIPS Patent provisions and some pharmaceutical patents II. TRIPS Undisclosed Information provisions II. The Doha Declaration on the TRIPS Agreement and Public Health III.August 2003 Decision and December 2005 amendment - Implementation of Paragraph 6 of the Doha Agreement and Public Health

TRIPS OBLIGATIONS ON PATENTS

• Patents shall be available for any invention, whether product or process , in all fields of technology criteria for patentability, subject to certain exclusions.

provided that they meet the • What are these criteria?

Patentability

There are three criteria to qualify for a patent: 1. an invention has to be new (“novelty”) 2. it must be an “ inventive obvious) step” (i.e. it must not be 3. it must have “industrial applicability” (i.e. it must be useful ) A complete and sufficient disclosure of the invention is required.

•

Exclusions from patent protection

Governments can refuse to grant a patent for an eligible invention for or health environment three reasons: 1. If prevention of commercial exploitation is necessary to protect public order or morality, • Including to protect human, animal or plant life • Or to avoid serious prejudice to the 2. diagnostic, therapeutic and surgical methods 3. plants and animals (other than micro organisms), or essentially biological processes for the production of plants and animals 5

PROVISIONS OF ARTICLE 27.3 (B) • Members may exclude from patentability: – Plants and animals – Essentially biological processes for their production • Members shall not exclude: – Micro-organisms – Non-biological and microbiological processes • Members shall protect plant varieties – By patents or – By an effective sui generis system or – By any combination thereof • Provisions to be reviewed 4 years after 1995 i.e. 1999 6

Patent rights and limited exceptions

• What are the patent owner’s rights?

– To prevent others from making, using, offering for sale,

selling or importing the patented product

– To prevent others from using the patented process or

doing any of the above acts with respect to the product directly obtained by that process

• Limited exceptions may be provided (such as prior use, private non-commercial use, research, education) if: – Do not unreasonably conflict with a normal exploitation – Do not unreasonably prejudice the legitimate interests of

patent owner

– Legitimate interests of third parties are taken into account • “Regulatory exemption” (or the so-called “Bolar exemption”) (WTO panel EU vs. Canada) 7

Exhaustion and parallel imports

Country A Country B Country C

national exhaustion

ARV Drug at

10 USD/dose international exhaustion national exhaustion

PARALLEL IMPORTS

• Article 6 – Only an obligation to respect national treatment and m.f.n.

– Cannot bring disputes to the WTO to address the issue of exhaustion of IPRs – Nature of exhaustion regime left to decision at the national level – Some legalistic debate about Article 6 vis-à-vis other provisions in TRIPS, GATT i.e. about what exactly TRIPS Article 6 says in regard to a Member's freedom to choose its own regime for exhaustion and parallel imports 9

TERM OF PROTECTION • At least 20 years from the date the patent application was filed (Article 33) • Extension of term of protection not required, for e.g. in case of regulatory delays in grant of marketing approval • Revocation of patents (Article 32 and Article 5A of Paris Convention) 10

OTHER EXCEPTIONS -COMPULSORY LICENCES AND GOVERNMENT USE • Article 31 covers both compulsory licences and use by governments – Art. 44.2 limits remedies (of use by governments or parties authorized by governments) to remuneration.

– No restriction on grounds (except in the case of semi conductor technology: 31(c)) but subject to 11 conditions (next slide) – Special exceptions for public non-commercial use (Article 31(b)) and for use as remedy for anti-competitive practices (Article 31 (k)). See also Article 40 which permits appropriate measures to prevent or control a-c-p.

– Dependent patents (Article 31 (l)) 11

Conditions of use without authorization Article 31

• Enjoyment of patent rights without discrimination whether product is locally produced or imported (Article 27.1) • Applications to be considered on their individual merits (a) • First, a prior unsuccessful effort to get a voluntary licence, except in cases of emergencies, public non-commercial use and anti competitive practices (b) • Scope and duration to be limited to purpose of grant (c) • licences to be non-exclusive, non-assignable except with goodwill (d,e) • Predominantly for supply of domestic market (f) • Licences shall be terminated when circumstances cease to exist (g) • Right holder: adequate remuneration (h) • Decisions on legal validity of grant and remuneration to be subject to judicial or other independent review (i,j) 12

• •

The Economics of Pharmaceutical Patents

Patents, exclusion of competition, prices and availability of patentable (new) medicines – High costs of production of new medicines, low cost of reproduction • If no legal barriers to entry, there would be few resources devoted to the production of such knowledge, as competitors could free ride.

• Partially non-appropriable even with IPRs: positive externalities – benefits to society greater than private profits – Patents are important for innovation in pharmaceutical, chemical sectors, less so in other sectors: • Taylor and Silberston (1973); Mansfield (1986); Levin exceptions

et al

(1987); Cohen et al (2000) • Characterised by large R&D expenditures, long development time, disclosure of proprietary information, further improvements even after drug launch, Bolar-type – Domestic pharmaceutical innovation not generally dependent on stronger patent rights but accelerates in countries with higher levels of economic development, educational attainment, and economic freedom – Differential pricing vs. parallel trade/reference pricing – Difficult to measure price and welfare effects: many attempts – Difficult to measure de jure vs. de facto strength of patents –Rapp-Rozek (1990), Ginarte Park (1997, 2008), but Japan’s narrow scope of claim patents – large number of me-too drugs.

(Qian Yi, RESTAT, 2007) R&D incentives – push and pull factors (Kremer) - patents vs. prizes – effect on inventing, developing and marketing new medicines 13

Protection of undisclosed information

– test data • information that is

Article 39

• What is undisclosed information?

– trade secrets or know-how; • What is the obligation under TRIPS?

– Article 39.2, the protection must apply to

secret ,

• that

has commercial value because it is secret and

• that has been

subject to reasonable steps to keep it secret.

– A person lawfully in control of such information acquired by, or used by others manner contrary to honest commercial practices.

must have the possibility of preventing it from being disclosed to, without his or her consent in a – “Manner contrary to honest commercial practices” includes breach of contract, breach of confidence and inducement to breach, as well as the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition.

Article 39.3

• Members, when requiring , • as a condition of approving the marketing of • pharmaceutical or of agricultural chemical products • which utilize new chemical entities , • the submission of undisclosed test or other data, • the origination of which involves a considerable effort , • shall protect such data against unfair commercial use . • In addition , Members shall protect such data • against disclosure , except where necessary to protect the public , or unless steps are taken to ensure that the data are protected against unfair commercial use.

II.

The Doha Declaration on the TRIPS Agreement and Public Health 16

The Doha Declaration: General Statements

• Recognition of the gravity of the public health problems ..., especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

• Recognition that intellectual property protection is important for the development of new medicines and recognize concerns about its effects on prices.

• Agreement that the TRIPS Agreement does not and should not prevent Members from taking • Reaffirmation that TRIPS can and should be interpreted and implemented in a manner supportive of Members’ right to protect public medicines for all.

Content of the Doha Declaration

• Guidance for disputes – Reference to objectives and principles • Clarification compulsory licences: – right to grant – freedom to determine the grounds • Clarification of emergency situations: – right to determine what constitutes a national emergency of other circumstance of extreme urgency • Clarification of exhaustion: – freedom to establish own regime 18

Content of the Doha Declaration – special provisions for LDCs

• Transfer of technology: – reaffirmation of Article 66.2 commitment • Extension of transition period for LDCs until 1 January 2016 with respect to pharmaceutical products – Need not implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections, without prejudice to the right to seek other extensions of the transition periods as under Article 66.1

Instructions for Further Work / Implementation

• Find expeditious solution to difficulties of Members with insufficient / no manufacturing capacities in pharmaceutical sector in making effective use of compulsory licensing: – General Council Decision of August 2003 (WT/L/540); Chairman’s Statement (WT/GC/M/82, para.29) – General Council Decision of 6 December 2005 (WT/L/641) Protocol Amending the TRIPS Agreement; Chairman’s Statement (WT/GC/M/100) • Extend LDC transition period as regards protection and enforcement of patent rights / undisclosed information in the field of pharmaceuticals: – TRIPS Council Decision extends LDC transition period until 1/1/2016 (IP/C/25) – General Council Decision waives obligations under Article 70.9 (WT/L/478) 20

III.

August 2003 Decision: Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health 21

What is the problem ?

• Article 31 allows compulsory licences, including – Art. 31(f) requires production under compulsory licenses " predominantly for the supply of the domestic market of the Member “ • The question arose whether there would be sufficient availability of supply of generic medicines produced under a compulsory licence – Immediate concern was supply of generic versions of new medicines in future since some countries with significant generic medicines production capacities were to provide product patent protection for this sector from 2005 onwards ⇒

Note: not every medicine is subject to patent protection in every

Solution: “Paragraph 6 System”

• The Para 6 system is about addressing a

health

problem in

legal

importing Member problem in (H IM) and a exporting Member( L EM) – H IM -L EM • Decisions consist of three derogations from TRIPS 1995 provisions – Decision on long-term waivers adopted on 30 August 2003 and on an amendment adopted on 6 December 2005 with no change in substance • Decisions to be read in the light of the General Council Chairman’s statements • Decision in effect since 30 August 2003 – Terminates when the amendment replaces it for each Member, thus no legal uncertainty 23

TRIPS and Public Health: The para.6 System

WTO Member with manufacturing capacity

Government / competent authority Art. 31(f): no export of predominant part of production

WTO Member with insufficient manufacturing capacity for pharmaceuticals

compulsory licence Generic Manufacturer Art. 31(f) may be waived if: - notifications are made - special marking/labelling of exported products - other conditions are met

 Art. 31(h) may be waived to avoid double remuneration  other Art.31 conditions continue to apply  Special provisions for Regional Trade Agreements with 50% LDCs 24

Scope and Coverage: Diseases and Products

• Definition of " pharmaceutical product patented process) of the pharmaceutical sector problems as recognized in para 1 of Doha Declaration, including • Diagnostic kits needed for using these products ": – Any patented product (or product of a – Needed to address the public health • Active ingredients needed for manufacture 25

Eligible Importing Members

• LDC Members automatically eligible • Any other Member eligible, subject to mandatory notifications • But: 44 Members have voluntarily opted out partially or fully • Non-WTO countries?

Chairman’s Statement

• Good faith use of the system • All reasonable measures to prevent diversion • Information on manufacturing capacities • Expeditious review in TRIPS Council and good offices of DG or Chair of TRIPS Council • List of voluntary partial/full opt-out countries 27

Recap: Use of the Para. 6 System Public Health Problem in WTO Member requiring pharmaceutical product

Product not patented Product patented Compulsory licence in compliance with Art 31 TRIPS Agreement with originator Pharmaceutical product can be manufactured domestically

Pharmaceutical product cannot be manufactured domestically

Supply by non-WTO Member

Product patented in exporting Member

Product not patented in exporting Member

Need to use para. 6 System if exported amount is predominant share of production

Timeline for Using Paragraph 6 System

I TRIPS Council notification by an importing Member LDC, of use the , other than a intention to system as an importer.

LDCs need not make this notification I/II TRIPS Council notification by importing Member giving details of needed products, manufacturing capacities and of grant of CL, where relevant.

LDCs need not assess manufacturing capacities.

Where 2 CLs, no remuneration paid in imp. Member if paid in exp. Member III TRIPS Council notification by exporting Member of grant of compulsory licence and conditions attached to it.

IV Before shipment, posting on a website by a compulsory licensee in exporting Member of quantities, destinations and distinguishing features of the products.

V Imports / exports Reasonable measures to prevent re exportation

IV.

December 2005 Decision: Protocol Amending the TRIPS Agreement 30

•

GC Decision WT/L/641 of

within 6 months acceptance

6 December 2005

• Basis: para.11 of August 2003 Decision which instructed TRIPS Council to initiate work on amendment by end 2003 with a view to its adoption • GC adopted a Protocol amending the TRIPS Agreement and submitted it to Members for • Protocol open for acceptance until 1/12/2007 • Takes effect upon acceptance by two thirds of membership – Date could be extended if necessary Note that Paragraph 6 System as established under August 2003 Decision continues to apply until entry into force of amendment in a Member 31

Statements by Chairman Recognition by MC

• Chairman’s Statement: – re-read prior to adoption of GC Decision – updates list of full opt-out countries • Chairman’s Statement on non-violation complaints: amendment without prejudice to overall question of applicability of NVCs to TRIPS • Hong Kong MC in December 2005: Ministers welcome work on TRIPS amendment to implement August 2003 Decision 32

Implementing Legislation in Exporting Members

• Based on information shared in the TRIPS Council these Members adopted implementing legislation: – Norway, Canada, India, EC, Switzerland (in effect) – Republic of Korea, China also adopted rules • Two notifications of use of Para 6 system from Rwanda (IP/N/9/RWA/1) and Canada (IP/N/10/CAN/1).

• 28 acceptances, including one from EC and its MS, have been received so far on the protocol to the amendment.

•

Possible reasons for little use of Paragraph 6 System

Possible reasons for only little use of Para 6 system so far: – Generic medicines available outside patent system – Reduction of prices offered by patent owners – Needed medicines financed by donors – Voluntary licences – Meant to address situation where non-predominant limit proves restrictive – Legislative changes in exporting countries recent or not yet done – Too complex? Lack capacity?

• WTO Secretariat holds dedicated Public health workshops + other regional/national workshops with adequate focus on the Paragraph 6 system • Some developing country Members want to have a workshop to review working of Para 6 system 34

Recap: Use of Paragraph 6 System

Remember: • The Para 6 system need not be used if: – There is capability for local production – There are voluntary licences/price reductions – No patents exist in exporting Member – Exporting country is not a WTO Member • But the Para 6 System needs to be used even if no patent in the importing Member – Where exports by a Member constitute the predominant part of the production under a compulsory licence 35

Observations

• Need for each country to take the necessary steps at national level to avail itself of TRIPS flexibilities • TRIPS forms part of the solution among other important factors: infrastructure, national health systems, procurement regimes, import tariffs, etc.

Consult our website

www.wto.org

For more information: [email protected]

Tel.: +41 22 739 57 38 Office N°: 3060