TWN Info Service on WTO and Trade Issues (Aug08/09)
12 August 2008
Third World Network

IP: Counterfeit issue stirs debate among WHO member states
Published in SUNS #6536 dated 12 August 2008

Geneva, 11 Aug (Sangeeta Shashikant and Riaz K. Tayob) -- The jurisdiction of international organisations over the enforcement of intellectual property violations has also become a controversial issue in the World Health Organisation, as it has in other agencies recently.

In the World Customs Organisation, attempts to push through a new uniform set of standards on intellectual property (IP) enforcement by customs authorities has resulted in developing countries asking for a review of a misleading Secretariat report alleging consensus for adopting the standards (see SUNS #6534 dated 8 August 2008).

The Universal Postal Union, which is holding its Congress in Geneva, has also been discussing resolutions aimed at involving postal authorities in raising awareness initiatives to prevent illegal circulation of counterfeits as well as supporting efforts to combat counterfeiting and piracy. In the course of the discussion, many countries have made clear that the postal authorities have no competence in this area (see SUNS #6535 dated 11 August 2008).

Developed countries have also attempted in the past two years to place enforcement of IPRs as an item on the agenda of the Council for TRIPS at the WTO, but this has faced objections by developing countries which argue that enforcement comes under the jurisdiction of national authorities, and parties that are dissatisfied can have recourse to the dispute settlement system of the WTO.

A similar debate on the content and mandate of IP enforcement also took place at the World Health Assembly, which is the annual forum for member states of the WHO to discuss health policies.

A draft resolution on counterfeit of medical products presented at the 61st World Health Assembly in May 2008 was the subject of intense discussion, as was a WHO Secretariat report (A61/16) on this issue.

After many member states raised concerns about the implications of the draft, it was decided to defer a decision on it. Instead, the next meeting of the WHO Executive Board in January 2009 will discuss the draft, and another discussion will be held at the next WHA in May 2009.

Both the draft Resolution and the Secretariat's report essentially sought to legitimize an initiative known as "International Medical Products Anti-Counterfeiting Taskforce" (IMPACT), its activities and documents.

The draft resolution (A61/A/Conf. Paper No. 1) was initially sponsored by Gambia, Ghana, Nigeria, Tunisia and United Arab Emirates. During a meeting at the Committee level, the European Union also became a co-sponsor.

During the debate at the WHA (23rd May), several developing countries raised several concerns, including:

-- The composition of IMPACT, whose members comprise industry representatives as well as law enforcement organisations;

-- The hasty push to endorse IMPACT initiative; and

-- The definition of counterfeiting proposed by IMPACT and the principles and recommendations developed by IMPACT without any prior deliberations of member states, while sidelining previous WHO guidelines on counterfeiting, without adequate explanation.

Countries also objected to the Secretariat's report for endorsing IMPACT and its activities and for addressing counterfeiting as an end in itself rather than as a public health issue.

A major underlying concern of the countries is that legitimate generic medicines may get caught up in the web of definitions and enforcement of "counterfeit products", with adverse consequences for access to medicine as well as legitimate trade. India, for example, stressed that generic and branded medicines that are not registered but that are available are not counterfeits.

After a lengthy discussion on the subject, the WHA in May agreed that the Secretariat's report and the draft resolution will be considered further by the 124th session of the Executive Board (in January 2009), for a decision on how to refer the matter (including the draft resolution) to the 62nd World Health Assembly in May 2009.

According to the Secretariat report, the WHO launched IMPACT in 2006 following a conference in Rome, which emerged with a "Rome Declaration". IMPACT's stakeholders include INTERPOL, OECD, World Customs Organization (WCO), World Intellectual Property Organization (WIPO), World Trade Organization (WTO), European Commission (EC), Council of Europe, United States Pharmacopoeia, Commonwealth Secretariat, Association of Southeast Asian Nations Secretariat, and International Federation of Pharmaceutical Manufacturers and Associations (IFPMA - the representative association of multinational pharmaceutical companies).

According to the report, there are five working groups under IMPACT, on (1) Legislative and Regulatory Infrastructure; (2) Regulatory Implementation; (3) Enforcement; (4) Anti-Counterfeiting Technologies; and (5) Communication.

The report states that IMPACT has developed: "Principles and elements for national legislation against counterfeit medical products", recommendations for strengthening WHO's Good Distribution Practices (and submitted them for consideration and appropriate action to WHO's Expert Committee on Specifications for Pharmaceutical Preparations); a guide to investigating counterfeiting of medical products and other pharmaceutical crimes (for training regulatory and enforcement officers); drawn up a communication strategy for creating awareness of the risks created by counterfeit medical products in the supply systems; and has published a summary assessment of existing technologies.

The draft resolution, inter alia, urges member states to: (1) establish and enforce legislation and regulations that prevent counterfeit medical products to be manufactured, exported, imported or traded in international transactions and the regulated distribution system, taking into account the principles and recommendations developed by IMPACT; (2) establish effective mechanisms of coordination and collaboration amongst health enforcement and other authorities as well as appropriate mechanisms enabling international cooperation; (3) promote awareness among health professionals and consumers of the risks posed by counterfeit medical products.

The draft resolution also requests the DG, inter alia, to: (1) support member states to develop and implement policies aimed at combating counterfeit medical products including facilitating and exchanging information at the international level, developing tools, guidelines, training and awareness initiative, and methodology for evaluation and monitoring; (2) strengthen the Secretariat of IMPACT; (3) seek extra budgetary resources in addition to those in the regular budget to this end; and (4) continue the development and dissemination of independent information on instances of counterfeits.

Essentially, the draft Resolution and the Secretariat's report sought to legitimize IMPACT, its activities and documents.

Some delegates as well as several independent experts following the issue say that member states should critically analyse IMPACT and its activities, including conflicts of interests as well as implications of the definition and measures proposed by IMPACT on developing countries before deciding on the endorsement of the initiative, its activities and the two documents.

According to experts, several of the measures proposed by IMPACT appear to be burdensome, financially and otherwise on governments, impinge on sovereignty, go beyond requirements of the TRIPS Agreement, promote purchase of IPR protected technologies (to combat counterfeiting) and has the potential of hampering legitimate trade.
A delegate from an African country, speaking privately, said that the problem with the draft Resolution was that it took power away from the regulatory agencies and placed it in the hands of the law enforcement agencies that had no clue about quality, safety and efficacy of medical products.

The delegate added that he had participated in the IMPACT meetings, but representatives of big pharmaceutical companies prepared all the documents in advance. There was hardly any deliberation during the meetings on the documents, which were then just presented for quick endorsement by participants at the meeting.

Another concern of experts is the definition of "counterfeiting", and the related mixing up of two separate issues - the counterfeiting of products and the quality of drugs.

These issues were captured well in an article of the Delhi-based Times of India, which said that: "WHO defines counterfeit medicines as those which are deliberately and fraudulently mislabeled with respect to identity or source. At the same time, products with correct ingredients but fake packaging bring trademark infringement within the scope of the definition. Thus, the definition mixes issues of spurious drugs and substandard drugs with intellectual property infringement."

IMPACT provides another definition, i. e. that ''a medical product is counterfeit when there is a false representation in relation to its identity, history, or source" and this applies "to the product, its container, packaging or other labeling information". According to the definition, it applies to "both branded and generic products.''

According to the Times article, although "the term counterfeiting has different definitions around the world, it is often defined as a trademark infringement". It quotes an expert from the Delhi-based Centre for Trade and Development (CENTAD) as saying: "The adoption of the IMPACT definition will have adverse impact on the access to drugs by branding legally produced generic drugs as counterfeit drugs''. The article also reported on fears that "with such regulations, customs authorities across the world will seize or delay the transit of legitimate generic medicines on suspicion of their being counterfeit".

Several of the concerns above were also voiced by some member states during the debate on the draft resolution and the Secretariat's report during the WHA last May, while some other member states supported the draft resolution and the report.

Nigeria, in support of the resolution, said that counterfeiting poses serious threats and is detrimental to the public health. It however added that the resolution was not intended to address intellectual property rights issues. Factors that contribute to counterfeiting include lack of appropriate legislation, weak penalties and absent or weak regulation, said Nigeria, adding that counterfeiters make huge profits.

Slovenia, on behalf of the European Union, said that a study by the European Commission demonstrated a 51% increase in seized counterfeits. It said that it actively supported IMPACT.
The US commended IMPACT on its strategy, guidance, information and efforts and urged continued support and commitment from member states and WHO. It supported the resolution and proposed several amendments including a new paragraph to control the transhipment of pharmaceutical products, active pharmaceutical ingredients and exipients used in the production of counterfeits.

Morocco and Japan also supported the resolution. United Arab Emirates, for the Eastern Mediterranean Region (EMRO), pushed for more financing for the initiative.

India, on behalf of the South East Asia Region (SEARO), objected to the draft Resolution and the Secretariat's report as both had not been considered or deliberated upon by the Executive Board. It said that it did not know what "principles and recommendations" were being referred to in the draft resolution as it had not seen them, and this may be true for other regions as well. Thus, how can these be taken into account, it asked.

India said it recognised the magnitude of spurious and poor quality medical products and was fully committed to combating those that did not conform to quality standards. It added that it was important to state up front (in the resolution) that the aim is to protect public health, not trade interests.

India also recalled another WHO initiative, i. e the "Guidelines for the development of measures to combat counterfeit medicines" (WHO/EDM/QSM/99.1), which it said, provided an overview of the problem and the factors contributing to counterfeiting, steps and specific measures to be taken to combat it.

The guidelines provide that member states take their own measures to combat counterfeits, said India, adding that WHO should provide a status update on the outcome of the guidelines. India also raised concerns with the "counterfeiting" definition proposed by IMPACT. It said this definition has never been used before. Any change in the definition whenever it is considered should state that generics do not entail patent infringement.

It also said that it was important to state up front that the aim was to protect public health and not trade interests. It emphasised that generic and branded medicines that are not registered but that are available are not counterfeits. India sought to defer the matter to enable member states an opportunity to consider all aspects since the nuances, implications, and scope of the issues have yet to be discussed.

Brazil expressed alarm that IMPACT's international stakeholders included WIPO, WTO, Council of Europe, IFPMA, European Commission and Interpol. It said that WHO had a crucial role in public health but it was concerned about how this role is now mixed with law enforcement mechanisms that could drive out legitimate generic producers.

Brazil said that it was not in a position to even "note" the report and requested further discussions. It added that the results from IMPACT had political consequences for developing countries and for legitimate producers. Brazil said that it did not recognise the legitimacy of IMPACT and its reports and thus saw no reason to discuss the resolution.

Argentina said that it could not support the contents of WHO's report as it focuses the discussion on combating counterfeits as an end in itself rather than a public health effort. It stressed that counterfeits should not be dealt with by WHO, adding that Article 1.1 of the TRIPS Agreement of the WTO states that member states can establish the mechanisms they see fit to implement the agreement.

Thailand also called for further discussions on the draft resolution and the Secretariat's report. It said the WHO should explain how the IMPACT initiative was different from (or similar to) the 1999 WHO Guidelines. If it is different, it should show the difference and explain the rationale for the change in the WHO's strategy.

Venezuela supported the interventions by India and Thailand, and said that there is a need to further analyse the causes of counterfeiting. Chile said that the Secretariat's report focuses on counterfeits as a problem in and of itself and not as a public health problem. It said that the documents produced by IMPACT did not have the mandate of the WHA. It also supported interventions by Thailand and India and said that it did not agree with the resolution.

Cuba said that not adopting the resolution does not mean that a country will not act against counterfeit goods as Cuba was doing a great deal in this regard.

Indonesia also agreed with others that the principles and recommendations developed by IMPACT and was mentioned in the Secretariat's report needs further exploration. Since these have implications beyond the health sector, more time is needed for national consultation.

Jamaica, on behalf of CARICOM, welcomed the IMPACT initiative but cautioned that expanding the nomenclature to other products should not divert attention from counterfeits. Counterfeits are sold with the intent to deceive with respect to origin, source or insufficient or incorrect ingredients that may or may not be harmful.

A drug that had not received regulatory approval is not necessarily harmful. The manufacture of counterfeits is not limited to developing countries but also includes Canada, Belgium, Netherlands and Portugal, amongst others. Generics are not counterfeits, it added.

Jamaica clarified that not all infringements of IPRs can be described as counterfeit and often it is a matter of controversy. It also stated that the relationship between rights and the exceptions to rights is complex, adding that sometimes cheaper products were also sold under the exhaustion of rights principles [parallel importation]; through the use of IPR exceptions, such as voluntary or non-voluntary licenses, and that these were not counterfeits. +