TWN Info Service on Health Issues (Oct15/08)
15 October 2015
Third World Network

US stands in the way of LDCs’ pharmaceutical transition period

Geneva, 15 Oct (Sangeeta Shashikant) – As the World Trade Organization’s intellectual property body begins its session today, there is emerging consensus among the organization’s members that the poorest nations in the world, the least developed countries (LDCs), should not have to apply or enforce pharmaceutical product patents or to implement ‘mailbox’ or exclusive marketing rights for as long as they remain LDCs.

The WTO Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) Council is meeting in Geneva on 15-16 October.

However, whether or not these vulnerable nations will clinch their desired demands very much depends on the United States, which remains opposed to LDCs’ requests.

A trade diplomat told Third World Network (TWN) that, “we have given the US concrete arguments, facts and figures supporting the LDCs’ requests, what else do they need” adding that its now a “political decision”. 

Trade diplomats also informed TWN that the matter is now to be discussed at the Ambassadorial level between the US and the LDC Group.

Earlier this year, the WTO LDC Group submitted as required by Article 66.1 of the TRIPS Agreement, a “duly motivated request” (IP/C/W/605) seeking an extension of the pharmaceutical transition period for as long as a country remains a LDC, as well as waivers from the mailbox and exclusive marketing rights obligation. The LDC Group’s request is aimed at extending the pharmaceutical transition period granted by paragraph 7 of the 2001 WTO ministerial Doha Declaration on TRIPS and Public Health. The transition period comes to an end this year.

[Article 66.1 of the TRIPS Agreement states: “The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period”.   Paragraph 7 of the Doha Declaration on the TRIPS and Public Health states: “We also agree that the least-developed country Members will not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of least-developed country Members to seek other extensions of the transition periods as provided for in Article 66.1 of the TRIPS Agreement”.

The TRIPS Council in its decision IP/C/25 formally adopted Paragraph 7 of the Doha Declaration.]

At the June 2015 TRIPS Council session the LDC Group defended their requests arguing that the classification of LDCs is contingent on a number of key human development indicators including levels of poverty, literacy, infant mortality and economic vulnerability determined by the United Nations. They also presented statistics showing the poor economic performance of LDCs, their widespread poverty and the massive public health challenges that prevail in LDCs.

The LDC Group further presented evidence of the successful use of paragraph 7 of the Doha Declaration by LDCs such as Sierra Leone, Djibouti and Zambia to facilitate importation of affordable medicines, and to speed up the supply of such medicines, stressing also that the Paragraph 7 mechanism is known as “one of the most successful provisions of the Doha Declaration on TRIPS and Public Health”.

They argued for waiver from exclusive marketing rights (EMRs) which confer patent-like rights, stating that “if LDCs are bound to grant EMRs, the value of a pharmaceutical transition period would be very limited, since access to medicines and other pharmaceutical products could be effectively blocked for at least five years”.

On mailbox, the LDC Group argued that “The requirement to install patent filing systems, implies considerable financial and administrative efforts that will place additional burdens on vulnerable LDCs” and that “requiring LDCs to install mailbox when they don't even have to grant any patents (under the General Extension of the transition period to implement the TRIPS Agreement), does not make sense” adding that it may have a chilling effect on generic producers, who may be deterred from investing in generic production of pharmaceuticals, which could in future be patented, thus adversely affecting the availability of affordable generic medicines for LDCs.

In the run-up to the June TRIPS Council session and since then, the LDC Group’s motivated requests to the Council have received widespread unconditional support from developing countries, the European Union members, various UN and international agencies (WHO, UNITAID, UNAIDS and UNDP), suppliers of generic medicines to LDCs, and civil society organizations from across the world. 

Even members of the US Congress, Senators including Senator Bernie Sanders, a contender for the US presidential campaign, have in various letters to Michael Froman the US Trade Representative (USTR) urged the US to support LDCs’ request for a pharmaceutical transition period for the duration that a country remains a LDC.

In unequivocally supporting the LDCs’ requests, European Commissioner Cecilia Malmstr๖m said: “The poorest countries of the world need effective access to medicines. Although patents stimulate innovation in developed and emerging economies, intellectual property rules should be a non-issue when the world's poorest are in need of treatment. This exemption will give the least developed countries the necessary legal certainty to procure or to produce generic medicines.”

On the duration, the European Commission’s press release of 10 September 2015 adds: “The WTO granted a time-limited exemption before to these countries, but the Commission believes that extending it indefinitely would give legal certainty for long-term supply as well as enhance local production of much-needed medicines”.

In a recent letter to the USTR dated 14October 2015, US Senator Sherrod Brown calls for the US to support the LDCs’ requests and “to reject any effort to require these severely impoverished nations to implement the TRIPS intellectual property requirements for pharmaceutical products by a certain date”, arguing that “Rejecting a permanent extension of the LDC waiver and setting a compliance date is impractical. Until a country has graduated from the LDC designation, meeting the TRIPS pharmaceutical requirements will limit its ability to address basic medical needs for its citizens and hinder efforts to lift them out of poverty. Tying the requirements to the LDC classification is in and of itself establishing a timeline by which a country must meet the pharmaceutical intellectual standards”

In an earlier letter to the USTR dated 2October 2015, seven US Members of Congress announced their support for the LDCs requests, stressing that “we believe that indefinite waiver of the WTO obligations to grant and enforce pharmaceutical patents is necessary and should be US policy. Waivers should not end based on arbitrary date but should end only when a country no longer classifies as an LDC under United Nations established criteria”.

In yet another letter to the USTR, presidential candidate Senator Bernie Sanders, states: “All over the world, people are finding that the prices of prescription drugs they need are rising and for many people, simply unaffordable. As a result, sick people get sicker. Some die. This situation is especially dire in the poorest countries in the world, countries classified by the United Nations (UN) as Least-Developed Countries (LDCs). The inability of people in these countries to afford the medicine they need is made worse because of a lack of a stable economy or public health infrastructure”, adding also his request that the US Administration “endorse an indefinite waiver of the World Trade Organization's (WTO) obligation to grant and enforce pharmaceutical patents for countries classified by the UN as LDCs.”

Despite this widespread support in particular from US legislators, in the numerous bilateral discussions with LDC representatives and informal consultations held by the Chair of the TRIPS Council, the US negotiators have remained steadfast their opposition to a transition period linked to the LDC status and the LDCs’ request for a mailbox waiver.

Trade diplomats speaking to TWN also indicated that the US have in some consultations suggested that they may require LDCs to agree to certain “principles” as part of the pharmaceutical transition period package, and that this demand is of concern as these “principles” could create barriers to access to affordable medicines in LDCs. 

Trade diplomats also said that Canada, Switzerland, Australia and Japan have in several consultations called for a time-bound transition period and questioned the need for a mailbox waiver; however these delegations would privately acknowledge that they would be willing to go along with consensus. Thus the US remains the barrier.+