TWN Info Service onWTO and Trade Issues (Jan09/01)
19 January 2009
Third World Network

Below is a news report analysing the WHO Secretariat's report and draft Resolution on the issue of "Counterfeit Medical Products" (EB 124/14) prepared for consideration of the WHO Executive Board meeting that begins on Monday 19th January.

Best Regards
Sangeeta Shashikant
Third World Network


WHO: Approach to "counterfeit" drugs may affect access to medicines
Published in SUNS #6618 dated 15 January 2009

Geneva, 14 Jan (Sangeeta Shashikant) -- A WHO Secretariat report and the attached draft resolution (EB 124/14)  prepared for the WHO Executive Board meeting starting 19 January proposes resolving health problems through mechanisms related to enforcement of intellectual property rights (IPRs).

Some experts are concerned that this is a wrong approach as it may end up negatively affecting the legitimate use of generic drugs and thus become an obstacle to access to medicines.

The mechanisms include bundling legitimate health concerns under the rubric of "counterfeit", a term used in connection with IPRs, wherein the numerous anti-counterfeiting initiatives that have emerged endorse solutions oriented towards protecting and enforcing the rights of the IP holders.

Another linked mechanism is the International Medical Products Anti-Counterfeit Taskforce known as IMPACT.

The Secretariat's report and draft resolution seeks endorsement of WHO member states for IMPACT and its activities  [This article deals with the "counterfeit" issue. A separate article will deal with the IMPACT mechanism.]

There are legitimate health concerns pertaining to quality, safety and efficacy of medicines as there are problems concerning products with wrong information on the label with regard to the content, date of manufacture, place of manufacture, date of expiry (known as false labelling), products which on the contrary to the label contain no active ingredient or a wrong active ingredient or an insufficient amount of active ingredient (known as spurious drugs) and; low-quality drugs caused by poor manufacturing practices, poor transportation techniques or poor storage facilities (substandard drugs).

The initial mandate given to WHO through resolution WHA 41.16 on rational use of drugs in 1988 was for the WHO to initiate programmes not only on "counterfeit" but also to address problems of "falsely labelled", "spurious", and "substandard" drugs. However, while the term "counterfeit" appears to have been given momentum by interests in the WHO, other concepts have been sidelined.

Thus, the WHO Secretariat's report and attached draft resolution titled "Counterfeit medical products" may come under scrutiny and debate at the EB meeting as the stakes involve the continued right of developing countries to have access to good quality, safe and affordable generic medicines.

According to experts, the documents before the EB could result in negative implications for access to medicines and hamper the development of generic drug industries in developing countries.

The report and draft resolution use a highly politicized terminology i. e. "counterfeit" and presents this term as a central health problem, distinct from IP issues. In para 5, the Secretariat's report states, "Often no distinction is made between patent violations, patent or trademark disputes, copyright violations and actual counterfeiting". Para 12 says that the intellectual property rights approach identifies the rights holder as the main victim of counterfeiters and as the main trigger of enforcement and prosecution while, in the case of medical products, the real victim of counterfeiting is the patient".

The Secretariat's report seems to disregard the numerous international documents and national laws that use "counterfeit" in connection with IPRs, particularly trademark violations and the numerous anti-counterfeiting legislations that are focused on IP protection and enforcement.

For example, the TRIPS Agreement in the WTO refers to counterfeit in its preamble i. e. "Recognizing the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods" and further refers to counterfeit in the context of trademark violations about 7 times.

In fact, Article 51 of TRIPS defines the term "counterfeit trademark goods" as "any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation".

A similar definition of counterfeit goods is used in "The EC Regulation concerning customs action against goods suspected of infringing certain IPRs and measures to be taken against goods found to have infringed such rights (Council Regulation (EC) No. 1383/2003)" as well as in other national legislations.

The US Food Drugs and Cosmetic Act defines a counterfeit drug as “a drug which, or the containers or labelling of which, without authorization, bears the trademark, trade name, or other identifying mark, imprint or device or any likeness thereof, of a drug manufacturer, processor, packer, or distributor other than the person or persons who in fact manufactured, processed, packed or distributed such drug and which thereby falsely purports or is represented to be product of or to have been packed or distributed by such other drug manufacturer, processor, packer, or distributor”

Numerous anti-counterfeiting initiatives have recently emerged, for example, the Anti-Counterfeiting Trade Agreement (ACTA) (a plurilateral initiative of the European Union, Japan, United States and Switzerland), World Customs Organisation on "Provisional Standards Employed by Customs for Uniform Rights Enforcement (SECURE)", G-8 Countries' Initiative on Counterfeits; WIPO's Advisory Committee on Enforcement (ACE), the Security and Prosperity Partnership (SPP) (between Canada, Mexico and US); Interpol's initiatives on IP crime and other initiatives in US as well as in the EU, all geared towards strong protection and enforcement of IP.

One of the main aims of these initiatives is to export legislation into developing countries, to get them to take on TRIPS-plus enforcement. Broadly some of the prescriptions in these anti-counterfeiting initiatives include:

(1) an extensive legal framework designed to ensure that the authorities and the right holders have the appropriate tools for strong IPR enforcement;

(2) shifting the burden of protecting IP rights to governments and reducing burden on IP holders to protect their rights;

(3) extensive powers to customs authorities to seize import, export and trans-shipment of goods suspected of infringing IP;

(4) authority to take action against suspected infringers even in the absence of complaint by right holders;

(5) enhancing penalties including imposing criminal sanctions (in addition to civil or where applicable administrative liability);

(6) extensive powers to the authorities to seize documentary evidence relating to the suspected infringement and the suspected goods themselves and for the granting of preliminary injunctions;

(7) seizure of the alleged infringer's bank accounts and other assets and profits to ensure payment of damages;

(8) destruction of IPR infringing goods and seizure of equipment and materials, used to make IPR infringing goods.

The WHO Secretariat deals with and uses the term "counterfeit" in a confusing manner. Such confusion could be damaging for access to medicines in a climate where G8 countries in particular the US and the EU are on a rampage to promote IP protection and enforcement that goes beyond the TRIPS Agreement through many methods including influencing programmes in UN and other international agencies.

Legitimate health concerns pertaining to quality, safety and efficacy of medicines do exist, as noted above. However, when some of such legitimate health concerns are packaged under the term "counterfeit", a term used in the context of IP the likely prescription is bound to be oriented towards protecting and enforcing the rights and interests of the IP holder to such an extent that it may damage access to medicines.

A case on point is Kenya's recent anti-counterfeiting legislation adopted by parliament in 2008 amidst publicity on how the consumer must be protected against counterfeit medicines. However, the bill has little to do with protection of consumers or public health and more to do with protecting the rights and interests of IP holders.

The scope of the bill includes a wide range of IP including plant breeders' right (under Seeds and Plant Varieties Act), trademarks, patents and other IP rights protected under the Industrial Property Act. The bill contains obligations exceeding those that developing countries are required to fulfil to comply with the TRIPS Agreement, while making no explicit accommodation for the legal limitations and exceptions usually found in IP laws.

The Bill defines counterfeiting as "taking the following actions without the authority of the owner of intellectual property right subsisting in Kenya or elsewhere in respect of protected goods". This paragraph applies to actions of (a) manufacture, production, packaging, re-packaging, labelling or making, whether in Kenya or elsewhere of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are identical or substantially similar copies of the protected goods, (b) manufacture, production or making, whether in Kenya or elsewhere, the subject matter of that intellectual property, or a colourable imitation thereof so that the other goods are calculated to be confused with or to be taken as being protected goods of the said owner or any goods manufacturer, produced or made under his licence; ( c) the manufacturing, producing or making copies, in Kenya or elsewhere, in violation of an author's rights or related rights.

The effect of such legislation is the protection of an IP right even when it does not subsist in Kenya. Thus, IP rights related to a product patented in another country but not in Kenya would still be enforced in Kenya.

In view of the detrimental effects of such legislation, NGOs working on access to medicines in Kenya battled to include a provision to limit damage to access to medicines and damage to the use of flexibilities (such as parallel importation and compulsory license) that are contained in the Kenyan Industrial Property Act. Thus, the final Bill includes an additional paragraph on medicines "in relation to medicine, the deliberate and fraudulent mis-labelling of medicine with respect to identify or source, whether or not such products have correct ingredients, wrong ingredients, have sufficient active ingredients or have fake packaging: Provided that nothing in this paragraph shall derogate from the existing provisions under the Industrial Property Act".

This definition is from a definition worked out in 1992 in a workshop organised by WHO and IFPMA. There are problems with this definition; for example, the terms "identity" and "source" are not explained. In the absence of such an explanation, "identity" could also refer to trademark or the trade name of the drug, which means that a drug of good quality but having a close similarity with another trademark or trade name can be termed as a counterfeit drug. The term "source" could be interpreted to mean the patent holder of that product or the chemical entity. In both cases the definition would address IP issues and not health issues.

However, this exception is somewhat of a victory for health groups particularly since it clearly safeguards at least in the context of medicines, the exceptions and limitations as well as other flexibilities in the Kenyan Industrial Property Act.

The Bill also promotes the protection of IPRs, a private right, more directly through publicly funded protection institutions and measures. For example the Bill establishes an Anti-Counterfeiting Agency to combat counterfeiting and their trade by receiving complaints regarding protected goods. The Agency shall also appoint inspectors with extensive powers to take action against goods suspected of infringing IPRs (with or without a complaint by the IP holder) including the right to enter and inspect any place reasonably suspected for counterfeit goods and to make arrests without warrants.

Other measures allow a customs office to seize products at the border on complaint by an IP holder. The process for complaint is simple in that the owner of an intellectual property right that has valid grounds for suspecting that the importation of counterfeit goods may take place, can make an application for seizure of the product to the relevant authority. The IP holder has to provide some evidence of an IP right subsisting, and the relevant authority has to consider and deal with the application in 3 working days to be satisfied that there are reasonable grounds that the applicant is prima facie the owner of IP right. The seizure may also take place on the initiatives of the inspectors.

The Kenyan bill is one concrete case that shows how a term such as "counterfeit" when used to address health problems can result in national legislation aimed towards protecting the interests of IP holders with potential damaging effects on access to medicines.

The latest definition for "counterfeit", proposed in the context of IMPACT in a meeting held in Hammamet, Tunisia on 3-5 December 2008 suffers from the same problems. The WHO Secretariat's report by referring to the definition in para 10 seeks endorsement of WHO member states to the definition concerned.

The definition proposed is as follows:

"The term counterfeit medical product describes a product with a false representation (a) of its identity(b) and/or source( c). This applies to the product, its container or other packaging or labelling information. Counterfeiting can apply to both branded and generic products. Counterfeits may include products with correct ingredients/components(d), with wrong ingredients/components, without active ingredients, with incorrect amounts of active ingredients, or with fake packaging."

"Violations or disputes concerning patents must not be confused with counterfeiting of medical products. Medical products (whether generic or branded) that are not authorized for marketing in a given country but authorized elsewhere are not considered counterfeit. Substandard batches of, or quality defects or non-compliance with Good Manufacturing Practices/Good Distribution Practices (GMP/GDP) in legitimate medical products must not be confused with counterfeiting."

The notes referred to above are as follows:

(a) Counterfeiting is done fraudulently and deliberately. The criminal intent and/or careless behaviour shall be considered during the legal procedures for the purposes of sanctions imposed.

(b) This includes any misleading statement with respect to name, composition, strength, or other elements.

(c) This includes any misleading statement with respect to manufacturer, country of manufacturing, country of origin, marketing authorization holder or steps of distribution.

(d) This refers to all components of a medical product.

As with the IFPMA-WHO definition, one of the most problematic aspects of the new definition on "counterfeit" is that it contains within its definition IP issues as well as health concerns such as false labelling and spurious drugs.

For example, the term identity is explained as including "any misleading statement with respect to name" which could also mean brand name, which is usually protected under trademark. Thus, a drug consisting correct active ingredients but having a close similarity with another trademark or trade name can be termed as a counterfeit drug.

Similarly, in the new definition, false representation of identity and source applies not only to labelling but also to the "product, its container or other packaging"; thus false representation with regard to any of those elements would make the product a "counterfeit" within the scope of the definition.

This means that a product also may be classified as counterfeit for example when the shape or color schemes of a product is similar to the competing product irrespective correct labeling information and contents. This is particularly problematic since presently the scope of trademark protection covers not only traditional trademark like words, signs or combination of both but also non-traditional trademark taste, shape, color, touch and feel, smell, etc. Thus, in this case the definition is more about protection of IP elements.

The definition also states that patent violations and disputes must not be confused with counterfeits, but this means that the definition includes other IP violations such as trademark violations.

The definition also includes some health elements of false labeling and spurious drugs. As mentioned an approach that combines IP and health issues under the rubric of "counterfeit" can then be used by proponents of "anti-counterfeiting" initiatives motivated to achieve a strong IP enforcement agenda and not by public health considerations. Thus, the resulting effect is the protection of the interests and rights of the IP holder rather than the patient, which could undermine access to medicines and nascent pharmaceutical industries in developing countries.

The inclusion of IP elements in the definition together with IP enforcement prescriptions such as seizures at the borders (promoted by the World Customs Organisation, Interpol, EU and US) will result in seizures that have more to do with IP violations (with no relevance to quality, safety and efficacy) cloaked under the rubric of public health protection.

Evidence of this taking place is already emerging as shipments of drug products of Indian companies meant for other countries are being seized at European ports on charges of so called counterfeiting and patent infringements. India is one the few countries that has an advanced generic manufacturing sector and is a major supplier of generic medicines to developing countries. According to a news report, the Indian Pharmaceutical Export Promotion Council (Pharmexcil) has asked the Commerce Ministry to ask the European Commission to relax its regulations on patent and trademark issues so that drug shipments on transit are not seized.

Another concern in relation to the definition is the scope of the definition i. e. it relates to "medical products" covering a broad range of items i. e. drugs, vaccines, diagnostic kits, medical devices (such as surgical devices, scanners, x-ray machines) as well as the raw material used for production. It is not clear from where WHO derives its mandate to deal with "medical products". WHA resolutions 41.16, 47.13 and 52.19 referred to the draft resolution only refer to medicines, drugs and pharmaceutical preparations. They do not provide a mandate to deal with "medical products".

The definition speaks of counterfeiting as an act done "fraudulently and deliberately" thus implying the presence of the element of intention; it also states that "criminal intent and/or careless behavior" should be considered for purposes of imposing sanctions. This means that even in the absence of intention (for example, in cases of careless behavior), an act could amount to counterfeiting.

This is contradictory and confusing. If an act is done fraudulently and deliberately, then the issue of "careless behaviour" for purposes of sanction should not arise. Also the second sentence to the note speaks about criminal intent "and" careless behaviour, which is also contradictory since an act cannot be careless and intentional at the same time.

In addition, according to the note (a) explaining the definition, element of intent will be considered for the purpose of imposing sanction. This implies that the element of intent will only be assessed at the trial stage in court. This does not prevent measures such as seizing goods at the border on the basis of a complaint by an IP holder on mere suspicion of "false representation" (be it intentional or unintentional). Secondly, it implies that the court will only consider the element of intent for purposes of deciding the nature of sanctions.

There is also concern over the imprecise and open-ended nature of the definition in particular explanations to the terms "identity", "source" which provides scope for further addition of any other elements and thus abuse. Further in the pharmaceutical context one is not clear regarding the meaning of the terms country of manufacturing, country of origin, marketing authorization holder and steps of distribution. For instance, the term country of origin can mean the country of origin of formulation or the country of origin of active pharmaceutical ingredient. The implication of this open ended terms is that good quality products will be termed as counterfeits.

Further, national laws especially drug regulatory laws already address the quality and safety of drugs issues from a public health angle. These laws use terms like misbranded drugs, spurious drugs and adulterated drugs. Adoption of the new definition may lead to complications at the national level and require amendments to present laws.

The consequence of using the term "counterfeit" to ensure good quality, safe and effective medicines could ironically become an obstacle blocking access to and availability of generic medicines in developing countries. Thus, such an approach has to be given serious consideration. Instead of using terminology as controversial and politicized as "counterfeit", it may be better to list public health problems, and deal with these problems directly from a public health perspectives.

The mandate given to WHO through resolution WHA 41.16 on rational use of drugs in 1988 was for the WHO to initiate programmes not only on "counterfeit" but also to address problems of "falsely labelled", "spurious", and "substandard" drugs. However, while the term "counterfeit" appears to have gained momentum in the WHO, the other concepts have been sidelined.

Legitimate health concerns pertaining to quality, safety and efficacy of medicines that exist with regard to false labelling, spurious, and substandard have to be addressed from a public health lens rather than being confused and complicated by using the perspective of IP rights holders and IP enforcement. +