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TWN Info Service on WTO and Trade Issues (Nov17/05)
3 November 2017
Third World Network
   
Sharing national experiences in use of compulsory licenses
Published in SUNS #8567 dated 3 November 2017


Geneva, 2 Nov (Kanaga Raja) - Highlighting the use of compulsory licenses by countries such as the United States, Germany and most recently Malaysia in order to gain access to amongst others affordable essential medicines, several major developing countries including India, Brazil and South Africa have stressed the importance of a balanced intellectual property (IP) system with built-in flexibilities.

India, Brazil and South Africa, along with other major developing countries, stressed this view last month (19-20 October) at the WTO TRIPS Council meeting.

[Earlier this June, Brazil, China, Fiji, India and South Africa had circulated a document (IP/C/W/630) on intellectual property and the public interest in which they had invited Members to share their experiences on the use of compulsory licenses for accessing health and other technologies at the 13-14 June meeting of the TRIPS Council. This issue was also discussed at the TRIPS Council meeting on 19-20 October.

[The co-sponsors of the document had highlighted a growing concern about an imbalance between intellectual property rights and the public interest. With regard to health technologies, for example, patents and related monopoly rights in test data, without sufficient use of balancing exceptions and limitations to protect the public interest, permit companies to maintain high prices and exacerbate crises of access around the world, where many patients cannot afford medicines, and force governments with finite health budgets to ration care, they said.

[Increased copyright protections create similar problems of access to knowledge goods, limiting the ability of many people around the world to access print, audio, or visual works of education or entertainment that we take for granted. These are only a few examples of the problem, they pointed out.

[There is a need to pursue a development-oriented approach towards formulating IP laws and policies rather than pursue an iconoclastic approach of IP for development. More than 20 years after the adoption of the TRIPS Agreement, there is a need for discussion in the TRIPS Council on the relationship between IP and the public interest and to broaden the understanding of how the IP system can be more responsive to public interest considerations, said the proponents. See SUNS #8478 dated 9 June 2017.]

During the discussions on intellectual property and public interest at the TRIPS Council meeting of October, South Africa highlighted several recent noteworthy developments (since the last meeting in June) that have occurred in the area of compulsory licensing, namely in the US, Germany and most recently in Malaysia.

India also pointed to the fact that since the last meeting of the TRIPS Council, compulsory licenses were issued by Germany and Malaysia.

It also noted that Brazil, Thailand, South Africa and others had previously used flexibilities under the TRIPS Agreement, including compulsory licenses to bring down the price by increasing the supply of generic anti-retroviral medicines.

India further gave some brief details of the compulsory licensing provisions in the US, while Brazil highlighted a recent case in Germany concerning the grant of a compulsory license for an antiretroviral ingredient.

At the TRIPS Council meeting, India requested the delegations of the European Union and Malaysia to provide details on the compulsory licenses issued by Germany and Malaysia respectively.

[In the case of Malaysia, the first time that the country had issued a government-use compulsory licence was back in 2003, when it became the first country in the Asian region to use this flexibility accorded under the TRIPS Agreement following the adoption of the Doha Declaration on TRIPS and Public Health in 2001. The licence was to enable the country to import generic versions of patented antiretroviral (ARV) drugs.

[The government-use authorization was initiated by the Ministry of Health (MOH) following unsuccessful negotiations with the patent holders GlaxoSmithKline and Bristol-Myers Squibb. MOH had presented a paper to the Malaysian Cabinet recommending the import of generic ARVs for treatment of HIV, and the Cabinet approved the import for a period of two years with a local pharmaceutical company appointed to import the drugs from India.

[As a result of the issuance of the compulsory license, the average cost of treatment per patient per month fell by 68% to 83%.

[The MOH had made an offer of 4% to the patent holders as remuneration but the patent holders reportedly did not respond and thus no payments were made. See: https://www.twn.my/title2/books/pdf/CompulsoryLicense.pdf

[This August, a second historic decision was made by the Malaysian Cabinet to become the first country in the world to issue a compulsory license for Sofosbuvir (400mg), patented by Gilead Sciences, for the treatment of Hepatitis C in government hospitals.

[A news report of 20 September 2017 in The Star, a Malaysian newspaper, cited the Minister of Health, Dr S. Subramaniam, as saying: "It is hoped that the implementation of the Rights of Government will enable more Hepatitis C patients to receive treatment and at the same time reduce the cost of treating complications arising from the Hepatitis C disease."

[The Star news report further cited the Minister as pointing out that there are approximately 500,000 patients in Malaysia who are infected with Hepatitis C and that an estimated 2,000 new cases are reported every year. See:http://www.thestar.com.my/news/nation/2017/09/20/dr-subra-generic-hepatitis-c-drug-to-be-offered-at-12-govt-hospitals/ ]

DISCUSSION ON IP AND THE PUBLIC INTEREST

According to trade officials, South Africa, Brazil, India, China, the European Union, the United States, Japan and the Holy See took the floor on this agenda item at the TRIPS Council meeting on 20 October.

South Africa delivered a statement on behalf of Brazil, China, India and South Africa during the discussions on intellectual property and the public interest.

In the statement, South Africa said the TRIPS Agreement clearly recognizes that the principles of IP protection are based on underlying public policy objectives.

Article 8 of the TRIPS Agreement entitled "Principles" states that WTO Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.

Article 8 (2) further states that appropriate measures may be needed to prevent the abuse of IPRs by rightholders, or to resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

The Trilateral Study of the WHO, WIPO and the WTO (in 2013) points out that prices of medicines are a critical determinant of access to medicines, especially in countries where the public sector is weak and poor people purchase their treatment on the private market. It posits that in some developing countries, up to 80 percent to 90 percent of medicines are purchased out-of-pocket, as opposed to being paid for by national health insurance schemes or private insurance schemes.

South Africa noted that in the last session of the TRIPS Council (in June), some delegations indicated that the use of compulsory licenses can assist countries to uphold the delicate balance achieved in the TRIPS Agreement, and noted that even though the use of compulsory licenses is commonly referenced in respect of health issues, compulsory licenses can also be used in a variety of other situations as well.

Various delegations made reference to the entry into force of the Protocol Amending the TRIPS Agreement, while the United Nations Secretary General's High-Level Panel Report on Access to Medicines was widely quoted.

According to South Africa, the right to health is a fundamental part of our human rights and our understanding of a life of dignity and as such the achievement of the highest attainable standard of health is the right of every human being, without distinction of race, religion, political belief, or economic or social condition.

This is codified in the 1948 Universal Declaration of Human Rights.

In the same vein, SDG Goal 3, Target 3.b relating to support for research and development of vaccines and medicines for the communicable and non-communicable diseases that primarily affect developing countries, promotes access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in the Agreement on Trade-Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health, and, in particular, provide access to medicines for all.

South Africa said that a common theme that emerged from the discussions was how governments use compulsory licenses to substantially reduce the price of essential medicines while striking a balance between the interest of right holders and users.

According to South Africa, it is however noteworthy that in specific areas, such as access to antiretroviral therapy, where substantial progress has been made, and where substantial price reductions for commonly used first-line ARVs (anti-retrovirals) have been achieved, prices for second-line regimes remain much higher.

The World Health Statistics point out that new health technologies, such as medicines, vaccines and diagnostics are becoming increasingly expensive.

As a result, said South Africa, a balanced intellectual property system, through a combination of flexibilities, complementary policies and incentives, guarantee sustainable public health outcomes that harness innovation and promotes access to medicines and health technologies.

It pointed out that since the last TRIPS Council meeting, several noteworthy developments have occurred in the area of compulsory licensing.

It said that on June 6, 2017, Judge William Martin Conley, a United States District Judge of the Western District of Wisconsin, issued a compulsory license allowing Apple Computers to use a patent it had infringed, owned by the Wisconsin Alumni Research Foundation (WARF), in return for an ongoing royalty.

This case follows a long line of cases that seem to suggest that court decisions in the United States have allegedly responded to instances of infringement of medical patents by denying injunctive relief, instead granting monetary damages, often in the form of royalty payments, what would in effect provide for compulsory licensing. Public interest is often at the heart of such decisions.

On July 11, 2017, the German Federal Supreme Court announced that it had affirmed the 2016 decision of the Federal Patent Court to issue a compulsory license allowing Merck to continue selling its HIV drug, Isentress. The Federal Court shared the assessment of the Federal Patent Court that a public interest in the granting of a compulsory license was credible.

On 20 September 2017, the Malaysian Department of Health announced that the Cabinet had authorized a government use compulsory license in respect of generics (versions) of the Hepatitis C medicine Sofosbuvir. The decision to initiate the Rights of Government was made after the MOH (Ministry of Health) efforts to include the drug in the Medicine Patent Pool (MPP) and price negotiations with the patent holder were unsuccessful.

In its statement, Brazil noted that at the first session in which the issue was discussed (in June), some delegations claimed that the document (IP/C/W/630) did not take into account the benefits of protecting IP and focused only on compulsory licenses.

Brazil said that it does not see those issues as mutually exclusive. On the contrary, Brazil said it understands that the balance reached by the TRIPS Agreement allows for ways to address their public health challenges while maintaining intellectual property systems that incentivize the investment and research necessary to develop innovative new medicines.

This is clearly provided in two of the pillars of the Agreement, namely, Articles 7 and 8, which contain the objectives and principles of intellectual property protection under the treaty.

In Brazil's view, a balanced intellectual property system, with built-in flexibilities as well as complementary policies and incentives, is the best way to promote innovation in all fields of technology, including the health sciences. In short: a balanced intellectual property system is a much stronger intellectual property system.

It said that the recent entry into force of the Protocol of Amendment to the TRIPS Agreement demonstrates the need to have mechanisms that ensure adequate remuneration to intellectual property rights holders while allowing Governments to adopt measures necessary to protect the public interest.

The Preamble of the TRIPS Agreement advocates this view, as it recognizes "the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives".

Brazil recalled that it had previously described the process that led to the single compulsory license issued by Brazil, as well as the results achieved by it.

More recently, Brazil noted, developments in countries from different regions have generated increased interest on the matter.

As an example, the Bundesgerichtshof, Germany's highest civil court, last July decided to uphold the decision of a lower court to grant a provisional compulsory patent license on Raltegravir, an antiretroviral drug ingredient.

The producer of that medicine was facing legal threats from the owner of the Raltegravir patent, in spite of distributing the drug in Europe for some years. In the course of judicial proceedings, it requested a compulsory license based on Section 24 (1) of the German Patent Pact.

Section 24 (1) of the German Patent Act lists two conditions for the grant of a compulsory license, namely, that the license seeker has, within a reasonable period of time, unsuccessfully attempted to obtain permission from the owner of the patent and, second, that the public interest calls for the grant of a compulsory license.

Based on it, it was decided to grant a provisional compulsory license, allowing the company to continue to distribute the medicine containing Raltegravir in the country.

The Court understood that there is a concrete need of certain HIV patient group for a treatment containing Raltegravir. The use of alternative compounds would entail severe risks of adverse effects and a loss of therapy quality, in particular for infants and pregnant women.

This decision, in Brazil's view, is a good example of how the intellectual property system provides the basis for advancing the public interest without prejudicing the innovative efforts by companies. It also shows that this should not be a polarizing issue, as it is of interest to all Member States of this organization.

Brazil said during the June session of the Council comments were heard to the effect that access to medicines also depend on factors outside the IP system.

While this is undoubtedly a complex phenomenon that requires a broad range of actions, the mandate of this Council does not include tax systems or the physical infrastructure of countries, but intellectual property, said Brazil.

"Let us focus on this issue and its concrete effects in a positive and constructive way, enabling a rich exchange of views and experiences that enhances the mutual understanding of the matter."

In its statement on this matter at the TRIPS Council, India expressed support for the statements made by South Africa and Brazil.

It noted that during the last meeting of the TRIPS Council, many Members, including India, had shared their experiences on the use of Compulsory Licensing (CL).

India said it had shared details of provisions in its national law regarding Compulsory Licensing, including the one compulsory license issued by India so far - i.e., in March 2012, Indian generic manufacturer NATCO Pharma was granted a compulsory license to manufacture Bayer's drug Sorafenib Tosylate (Nexavar) used for the treatment of kidney and liver cancer.

It noted that since the last meeting of the Council for TRIPS, compulsory licenses were issued by Germany and Malaysia.

According to India, the TRIPS Agreement attempts to strike an appropriate balance between the interests of rights holders and users. The TRIPS Agreement also recognizes that the principles of IP protection are based on underlying public policy objectives.

In furtherance of the objectives and principles of TRIPS enshrined in Articles 7 and 8, a number of safeguards or flexibilities have become an integral part of the TRIPS framework.

These flexibilities have been clarified and enhanced by the 2001 Doha Declaration on TRIPS and Public Health that WTO members have the flexibility to interpret and implement the TRIPS provisions in a manner supportive of their right to protect public health.

India said that Article 31 provides members complete freedom to decide the grounds for issue of compulsory license. The Doha Declaration on the TRIPS Agreement and Public Health has also duly confirmed what was already implicit in the TRIPS Agreement - that WTO Members have the freedom to determine the grounds upon which compulsory licenses are granted.

India noted that during the 1980s and 1990s the antiretroviral (ARV) medicines used to treat HIV/AIDS were priced beyond the reach of most people who needed them in developing countries.

Countries like Brazil, Thailand, South Africa and others have used flexibilities under the TRIPS Agreement, including compulsory licenses to bring down the price by increasing the supply of generic ARV medicines for a fraction of the price of the patented equivalents.

Indian generic companies, especially CIPLA, played an important role by announcing in early 2001 that the triple therapy could be manufactured for less than a dollar a day from the price of standard triple therapy of US$10,000 per patient/year.

Indian generic companies made ARV medicines accessible to all those who needed the drugs but had previously not been able to afford them.

India then went on to provide some brief details of the Compulsory Licensing provisions in a developed Member, the United States.

It said according to United States Congressional Research Service Article "Compulsory Licensing of Patented Inventions" dated 14 January 2014, the law in the United States permits for the issuance of compulsory licenses in a number of circumstances, and also allows for circumstances that are arguably akin to a compulsory license.

The Atomic Energy Act, Clean Air Act, the Federal Insecticide, Fungicide and Rodenticide Act and Plant Variety Protection Act provide for compulsory licensing.

The Atomic Energy Act allows for compulsory license if the invention or discovery covered by the patent is of primary importance in the production and utilization of special nuclear material or atomic energy; the Clean Air Act contains a similar provision relating to devices for reducing air pollution; and the Plant Variety Protection Act, Section 44 - "Public Interest in Wide Usage" - provides for compulsory licensing of seed-bearing plant that are protected by a plant variety certificate, a patent-like instrument granted by the Department of Agriculture.

The Bayh-Dole Act offers the federal government "march-in rights," and 28 USC Section 1498 provides the US government with broad ability to use inventions patented by others.

Compulsory licenses have also been awarded as a remedy for antitrust violations and a court may decline to award an injunction in favour of a prevailing patent owner during infringement litigation, an outcome that some observers believe is akin to the grant of a compulsory license.

India cited the September 2016 report of the UN Secretary-General's High-Level Panel (HLP) which states that many governments have not used the flexibilities available under the TRIPS Agreement, including compulsory licenses for various reasons, ranging from capacity constraints to undue political and economic pressure from states and corporations, both express and implied.

India said political and economic pressure placed on governments to forgo the use of TRIPS flexibilities violates the integrity and legitimacy of the system of legal duties and rights created by the TRIPS agreement and as reaffirmed by the Doha Declaration.

India quoted the recommendations in the HLP report on Compulsory Licenses: "Governments should adopt and implement legislation that facilitates the issuance of compulsory licenses. Such legislation must be designed to effectuate quick, fair, predictable and implementable compulsory licenses for legitimate public health needs, and particularly with regards to essential medicines. The use of compulsory licensing must be based on the provisions found in the Doha Declaration and the grounds for the issuance of compulsory licenses left to the discretion of governments".

India requested the delegations of the European Union and Malaysia to provide details on the Compulsory Licenses issued by Germany and Malaysia respectively.

It looked forward to listening from other delegations on their experiences on using this important TRIPS flexibility - compulsory licensing.

(The full statements of India, Brazil and South Africa have been posted on the website of Knowledge Ecology International (KEI) at www.keionline.org)

 


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