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TWN Info Service on WTO and Trade Issues (Jan09/03)
23 January 2009
Third World Network

WHO: Counterfeit taskforce may block legitimate access to generics
Published in SUNS #6623 dated 22 January 2009

Geneva, 21 Jan (Sangeeta Shashikant) -- An anti-counterfeit taskforce set up under the World Health Organisation could be used by multinational drug companies to place obstacles to the trade in generic drugs in developing countries, thus affecting access to medicines.

This potential problem is expected to be a source of contention when the WHO Executive Board (EB) meeting, which started on Monday, discusses this issue later this week.

The discussion will take place in an agenda item related to the WHO Secretariat's report and draft resolution on "Counterfeit Medical Products" (contained in EB 124/14).

The documents present counterfeit as a severe health problem and as an issue that is distinct from intellectual property right issues; endorses the establishment of International Medical Products Anti-Counterfeit Taskforce (IMPACT) and indirectly its activities; and encourages member states to adopt national legislation and regulations to combat counterfeit medical products presumably on the basis of documents issued by IMPACT.

It also provides freedom to the WHO to link up with any institution/entity on this issue, including outsourcing technical assistance, notwithstanding the special interests that entity might have. It further empowers IMPACT by leaving implementation of the resolution to IMPACT as well as allowing IMPACT to make recommendations to WHO member states.

Ahead of discussions on the agenda item, several African country delegates participating in the EB meetings have privately pointed out that in using the term "counterfeit", they intend to protect against medicines with no or wrong active ingredients (spurious medicines) and medicines of low quality (substandard medicines) and that their intention on this issue is not to protect or enforce IP rights.

Other delegations and experts have however pointed out that the term "counterfeit" is a term used in connection with IP rights, particularly trademarks infringements. They add that it is perplexing that WHO is stressing on "counterfeits", instead of directly addressing health concerns such as spurious and substandard medicines.

These delegations are also concerned that health is being used as a front through the use of the term "counterfeit" to facilitate and expedite the IP enforcement agenda.

Delegations have also privately confided their concerns about the use of the IMPACT as a vehicle to push forward the IP enforcement agenda and to put in place measures to squeeze out the generic industry, in an attempt by drug multinationals to retain market competitiveness in the pharmaceutical sector.

These concerns have been heightened with the issuance of a corrigendum EB 124/14 Corr. 1 by the WHO. The initial draft resolution states, in the preamble, "Recognizing that disputes about, or violation of, intellectual property rights are not to be confused with counterfeiting". The corrigendum corrects this to "Recognizing that disputes about, or violations of, patents are not to be confused with counterfeiting".

The effect of the Corr. is to ensure that other IP violations particularly trademark violations are covered by the counterfeit definition put forward in the Secretariat's report.

[Specific concerns with regard to the use of the term "counterfeit" have been reported in SUNS #6618 dated 15 January 2009.]

There are also many questions surrounding IMPACT, in relation to its role in IP enforcement and creating barriers that would undermine the development of generic manufacturers of developing countries.

The origins of IMPACT can be traced to a concept paper "Combating Counterfeit Drugs: A Concept Paper for Effective International Cooperation" drafted by Michele Forzley, a US-based lawyer and a representative to a US Commerce Department Advisory Committee on Intellectual Property.

This paper was based on another 2003 study "Counterfeit Goods and Public's Health and Safety", supported by the US Patent and Trademark Office (USPTO) and whose copyright is owned by the International Intellectual Property Institute (IIPI), an industry think-tank. It focussed on promotion and enforcement of IPRs.

The 2003 study states that the goal "is to begin the process of shifting the policy perspective on counterfeit goods to an understanding that counterfeits are not only an intellectual property legal problem, but also a very real public health problem". It added that "To re-frame the policy perspective is fundamental to the success of any strategy on counterfeit goods".

The paper remarks "what havoc counterfeits might wreck... if resources devoted to intellectual property seizures are redirected towards other objectives", and that "often in the developing/ underdeveloped world public health surveillance is inadequate or non-existent, particularly in those with no developed intellectual property legal system."

IMPACT was launched in 2006 following a conference organised in Rome by the WHO. It was supported by the International Federation of Pharmaceutical Manufacturers Association (IFPMA, an association of multinational companies) resulting in the Rome Declaration.

The Chair of the taskforce when it was initially launched was Dr. Howard Zucker, at that time a WHO Assistant Director-General of Health Technology and Pharmaceutical division. He has been criticised by health NGOs and even within the WHO secretariat for slowing down WHO's work on access to medicines, particularly where it relates to the use of TRIPS flexibilities.

Objectives outlined in the Rome Declaration include promoting coordination among different anti-counterfeiting initiatives and raising awareness of the need for legislative measures at national level. The long-term aim of IMPACT is to "explore further mechanisms, including an international convention, for strengthening international action against counterfeit medicines".

IMPACT: Issues of Participation & Transparency -- There is concern over the influence that multinational drug companies exert over IMPACT, particularly in norm-setting. IFPMA plays a central role in the activities of IMPACT as its Director General (presently Alicia Greenidge) heads the Working Group on Technology. The MNCs also participate in IMPACT through Pharmaceutical Security Institute (PSI), which was established by 14 pharmaceutical MNCs to work on counterfeit drugs.

This direct participation of the private sector in a WHO initiative raises serious issues of conflict of interests and whether there has been compliance with the WHO Guidelines on Working with the Private Sector to Achieve Health Outcomes.

Also, the ad-hoc participation of selected WHO member states in IMPACT raises questions as to the extent of participation of WHO member states and the basis on which member states are selected to participate in IMPACT's activities. Another transparency concern is that IMPACT has been operating outside the purview of WHO member states.

IMPACT & Norm-Setting -- IMPACT's 2007 General Meeting endorsed a text on "Principles and Elements for National Legislation against Counterfeit Medical Products" ("2007 Model Elements"), which contains the WHO and IMPACT logos. This text covers scope; definitions; obligations of governmental institutions, manufacturers, operators of the distribution chain, retailers and other operators; what amounts to an illegal act; sanctions; and nature of sanctions.

A December 2008 General Meeting of IMPACT in Tunisia revised the text to also include medical devices. More than half the participants (mentioned in the participants' list) were from organizations with a strong interest in IP protection and enforcement.

The Model Elements are meant to serve as a "reference for developing ad hoc legislation aimed at effectively combating counterfeit medical products within their jurisdiction". In fact, it clearly recognises that "Specific national and/or regional bodies of criminal, pharmaceutical, administrative, intellectual property and civil legislation may need to be established or enhanced on the basis of the principles described in this document..."

It is also noteworthy that the Model Elements for national legislation does not explicitly recognise the use of parallel importation and other TRIPS flexibilities. The Model Elements contains a wish list of obligations that governmental institutions, manufacturers, operators of the distribution chain, retailers and other operators should undertake. It lists more than 28 responsibilities for the government, 9 responsibilities for the manufacturers, 8 responsibilities for the retailers and 5 responsibilities of other operators.

The responsibilities are lopsided and place a heavy burden on the governments. Many of the obligations mentioned are the subject of much debate and dispute in the other fora such as the World Customs Organisation and Anti-Counterfeiting Trade Agreement (ACTA), an initiative on IP enforcement launched by developed countries.

IFPMA, being the Chair of Working Group on Technology, plays a central role in the overall standard-setting functions of IMPACT (since Chairs of Working Groups are also members of the Planning Group of IMPACT), with a mandate to assess technologies to prevent, deter, or help to detect counterfeit products and disseminate information and recommendations on the merits and limitations of technologies. Thus, it is the pharmaceutical industry that will determine the level and types of technology to be used for anti-counterfeit purpose.

For this purpose as well, Glaxo Smith Kline has prepared a paper on "Anti-Counterfeiting Technologies for the Protection of Medicines" and this paper contains the logos of WHO as well as of IMPACT. Interestingly, the paper states "some of these [technologies] are protected by international patents and may only be available from licensed suppliers, subject to appropriate royalties or license fees".

The Terms of Reference of IMPACT clearly states that all IMPACT's documents and other outputs will be issued by WHO and will be disseminated with appropriate disclaimers, including that the content does not necessarily reflect the views or state policy of the participating organisations, agencies and institutions (including WHO).

However, IMPACT documents available on websites (e. g. the 2007 Model elements) do not contain this disclaimer, although the WHO logo is visible on IMPACT documents. There is thus a concern that there is a presumption that IMPACT's documents reflect the position of the WHO Secretariat and its member states.

IMPACT and Barriers to Trade -- Many obligations in the 2007 Model elements could create non-tariff barriers (NTB) for trade in medical products and become possible entry barriers for the generic industries particularly in developing countries.

Some of these elements include: (a) to regulate the manufacture, importation, exportation, distribution, supply, donation, and sale of medical products, thereby ensuring that those who perform any transaction have specific license or are authorised to do so; and (b) to establish regulations for a distribution system including measurers for traceability of medical products throughout the distribution channels.

Other elements are to establish import procedures (including designating a limited number of entry points for imported medical products); to regulate manufacture of active substances and of certain experiments that may pose public health risks; to regulate international trade of labels and packaging materials for medical products; to ensure that suppliers of raw, starting and packaging materials are legitimate and finished medical products are delivered to legitimate operators of the distribution chain, including verifying the legitimacy of business partners; and to document the origin of all materials used in the manufacture of authorised products.

Several of the above can be considered non-tariff barriers for trade in medical products. Besides this, the measures raise other concerns.

The measures may affect TRIPS flexibilities such as parallel importation of good quality medicines, which is recognised by the WTO members as a measure to promote access to more affordable medicines. Regulations such as mentioned in paragraph (b) may push parallel traders out of the system, resulting in budgetary consequences for developing countries.

Similar regulations have been proposed in the EU. The pharmaceutical industry is calling for an EU-wide identification system to track and trace medicines to the production site. Parallel distributors are opposed to such measures; also pointing out that there is no evidence that parallel trade is an entry point for counterfeit medicines.

The abovementioned measures may also undermine access to medicines as well as nascent generic pharmaceutical industries.

For example, the Model Elements makes it illegal to "manufacture, transport or distribute any equipment, materials, components (including genuine ones) or documentation used in the production or to accompany the distribution of counterfeit medical products with the knowledge or intent that they be used for such purposes". Thus, such a measure would impose liability on manufacturers of active pharmaceutical ingredients (APIs), if those APIs are used to make counterfeits.

Such a measure places a major burden on the API maker as it would have to verify the validity of the manufacturers to whom they sell and to ensure that all use is legitimate.

The measures also impose liabilities on the transport companies, the makers of labels and all other entities that are directly or indirectly related to the manufacture, transport and distribution of the so-called counterfeits.

Ultimately, such measures would result in entities refusing to deal or trade with generic manufacturers and would thus undermine generic industries in developing countries and undermine access to medicines.

Generic drug industries in developing countries are already adversely affected by the TRIPS Agreement. Any additional standards required with regard to import and export including adoption of technology standards would further hamper the attempts of many developing countries to develop their pharmaceutical manufacturing capacity.

IMPACT & IP Enforcement Agenda -- Compounding the problems of lack of participation and transparency is the fact that intergovernmental organisations and the industry associations that IMPACT is linked with are engaged in an aggressive IP protection and enforcement agenda including establishing TRIPS-plus standards. These organisations include the INTERPOL, WCO, WIPO, European Commission, IFPMA, and PSI.

In fact, IMPACT's meetings such as Conference on Developing Effective Legislation to Combat Counterfeit Medical Products (10-12 December 2007) and Meeting of Jurists and Experts on Legislation to Combat Counterfeit Medical Products (12-13 July 2007) are listed as "WIPO's enforcement-related training and awareness-raising activities and cooperation with intergovernmental and non-governmental organisations".

The G8 countries also identify IMPACT as part of their IP enforcement agenda and in this regard would like to strengthen cooperation with WHO.

Susan Sell of George Washington University in a paper identifies INTERPOL, WCO, WIPO and IMPACT with the IP Anti-counterfeiting and enforcement agenda which "involves hundreds of OECD-based global business firms and their foreign subsidiaries."

IMPACT & Technical Assistance -- Endorsement of IMPACT in the Secretariat's report and in the draft resolution would set a significant precedent in the WHO in that norms set essentially by the private sector will then become the basis for technical support at the national level.

There is evidence that some developed country members have such intentions. A recent European Commission paper on "Safe, Innovative and Accessible Medicines: A Renewed Vision for the Pharmaceutical Sector" states its intention of using IMPACT to develop and enforce legislation against third countries. The same paper describes how the EU is losing market share in the pharmaceutical industry to emerging market economies. The EC is a key funder of IMPACT.

The report estimates that $20 million will be needed for supporting activities at regional and country levels and $10 million for global coordination, policy guidance and the IMPACT secretariat's costs.

Establishing and enforcing national legislation particularly in developing countries through any agency (notwithstanding their vested interest) that is able to provide funding is a key aim of the draft resolution in EB 124/14.

However, many developing countries privately have raised concerns that the authority to deal with quality and safety issues for medicines is being taken away from drug regulatory authorities and being placed in the hands of law enforcements agencies which have little idea about such issues. +

 


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