Info Service on Intellectual Property Issues (Feb19/01)
Geneva, 7 Feb (D. Ravi Kanth) – The World Health Organization (WHO) has thrown its weight behind a South African proposal for “promoting public health through competition law and policy” at the World Trade Organization, saying that “effective use of competition policy could be in the best interests of patients and health systems.”
In the face of intense opposition from the United States, Japan, and the European Union to the South African proposal at the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council meeting on 8-9 November 2018, the WHO had stated unambiguously that “health is a human right and no one should get sick or die just because they are poor or they [poor] cannot access the services they need.”
Emphasizing the importance of the Sustainable Development Goal 3 that calls on nations to “ensure healthy lives and promote wellbeing for all at all ages” at the meeting, the WHO, the global watchdog for public health, said “competition law is one important tool to promote innovation and access to health technologies.”
Anti-competitive behavior in relation to intellectual property, according to the WHO, could appear, for example, with life-cycle management practices and defensive patenting.
The WHO had cited the European Court of Justice judgement in a case on abuse of dominant position to prevent or delay market entry of generic competitors through misuse of the patent system and regulatory procedures.
The WHO had expressed concern on “overly restrictive conditions in medical technology licensing or mergers between pharmaceutical companies that can lead to undesirable market concentration and pay-for-delay agreements between originator and generic companies.”
It offered several other examples to drive home the message of the use of ” all policy tools”, including promoting public health through competition policy, so as to enable increased access to medicines, vaccines and health technologies.
“IP protection,” the WHO said emphatically, “is not exempted from the application of competition law” and “effective use of competition policy could be in the best interests of patients and health systems.”
As South Africa along with India, China, Indonesia, and Brazil among others intensify their fight for “promoting public health through competition law and policy” at the World Trade Organization, the United States, Japan, and the European Union continued to oppose the South African proposal on one ground or the other on a theological basis, said an IP (intellectual property) negotiator from a developing country, preferring anonymity.
But South Africa refused to budge in the face of intransigent opposition from the US, Japan, and the EU and went on to circulate another proposal.
In its latest proposal on “Intellectual Property and the Public Interest: Promoting Public Health through Competition Law and Policy” circulated on 1 February, South Africa said it wants to continue “the discussion on the linkage between intellectual property and competition law and policy” with specific reference “to exploitative excessive pricing and restrictive practices such as reverse payment agreements, strategic patenting and more lately, the evolution of niche pricing of off-patent pharmaceuticals.”
At a time when the United States continues to take unilateral action against countries under its WTO-condemned Special 301 provisions and attempts to bring new provisions in the WTO’s TRIPS agreement to protect innovation, South Africa spoke about the evolution of the discussion last year at the TRIPS Council meeting.
South Africa along with other co-sponsors, for example, “endeavoured to enhance the understanding of Members of the various approaches to competition law and policy and how competition norms are used to prevent or deter practices such as collusive pricing or the use of abusive clauses in licensing agreement that unreasonably restrict access to new technology and prevent the entry of generic companies and may result in higher prices for medicine.”
Significantly, competition law remains one of the “least discussed flexibilities within the WTO’s TRIPS Agreement” which sets “minimum norms” for standards of IP protection that significantly limit Members’ discretion on a large number of IP rights issues.
Several issues, according to South Africa, were discussed. They include the legal basis that Members use to address abusive practices in their domestic markets and whether members have established policies to deal with technology transfer pricing and other aspects of transfer of technology transactions.
Also, South Africa had sought to know whether compulsory licenses had been used by Members’ competition authorities to restore competition in cases involving the exercise of IP rights.
During the last TRIPS Council meeting in November last year, South Africa sought to discuss the best practices adopted by members “in respect of the subject of the control and remedies of excessive pricing and whether context-specific methodologies were employed by Members to determine whether such prices were indeed excessive and how such situations where remedied.”
Against this backdrop, South Africa and the co-sponsors want to discuss during the TRIPS Council meeting on 13 February that “excessive pricing in the pharmaceutical industry has been under the spotlight and there has been a number of competition enforcement cases regarding exploitative excessive pricing.”
Citing a recent publication of the European Commission on “Competition Enforcement in the Pharmaceutical Sector (2009-2017)”, South Africa noted ” that not all jurisdictions prohibit exploitative excessive pricing” which indicates underlying competition problems.
“Unlike the binding minimum standards of intellectual property protection and enforcement contained in the TRIPS Agreement, there is no equivalent international legal instrument for competition law that would provide such minimum standards of protection,” South Africa had argued in its latest proposal.
Therefore, “competition policy has an important role to play in ensuring fair access to medical technology and fostering innovation in the pharmaceutical sector,” South Africa maintained.
More important, “WTO Members have absolute policy space under international law to design their national competition laws in accordance with their domestic interests and needs and the level of their development,” South Africa argued.
South Africa urged “members to share their national experiences and examples of how competition law is used to achieve public health and related national objectives”.
It wanted members to share their ideas on “collusive pricing or the use of abusive clauses in licensing agreements that unreasonably restrict access to new technology, the use of measures that prevent the entry of generic companies and result in higher prices for medicines, reverse payment agreements and strategic patenting, patent thickets and product switching.”
It posed several questions for members to discuss during the meeting. The questions include:
(1) When dealing with exploitative excessive pricing in the context of anti-trust or competition enforcement in the pharmaceutical and medical technology sector, should competition/anti-trust authorities become quasi price regulators? What are the practices or guidelines that Members have followed to address exploitative excessive pricing in their respective markets with specific emphasis on actions undertaken by competition/anti-trust authorities?
(2) What examples of best practice can Members identify on the subject of the control and remedies for exploitative excessive pricing? Are there context-specific methodologies employed by Members for determining if prices are excessive, and what mechanisms are used to remedy and control pricing abuse?
(3) To what extent can abusive practices currently prevalent in the pharmaceutical industry be addressed through improving the patent system, by, for example, raising the bar of patentability requirements or increasing registration fees? What have Members’ experiences been with these types of measures or other approaches that have been followed?
(4) Have any Members recently conducted market inquiries into the pharmaceutical sector to assess its impact on access to medicine or more generally the impact of the pharmaceutical sector on competition in particular market segments? If so, what were the findings and what remedial actions were recommended or taken?
(5) To what extent can technical assistance and capacity building contribute to the delivery of more effective policies by WTO Members in the field of competition law to address the abuse of intellectual property rights? What role can international organisations play in this regard, including the WTO?
In short, South Africa has set the stage for another intense battle at the TRIPS Council meeting next week between the dominant Northern countries – the US, the EU, and Japan among others – who want to strengthen the monopoly-protection laws of their pharmaceutical patent holders and the Southern countries which are seeking affordable access to medicines for their hundreds of millions of disease-burdened populations.