TWN Info Service on WTO and Trade Issues  (Nov10/02)
9 November 2010
Third World Network

TRIPS Council holds in-depth review of "Para 6" system
Published in SUNS #7030 dated 1 November 2010

Geneva, 29 Oct (Kanaga Raja) -- A formal meeting of the regular session of the TRIPS Council on 26-27 October took up amongst others an in-depth review of the implementation of the "Paragraph 6" solution in respect of the Doha Declaration on the TRIPS Agreement and Public Health.

Discussions were also held on the latest version of the draft Anti-Counterfeiting Trade Agreement (ACTA) (see separate article), as well as on a "triplet" of related issues -- review of the provisions of Article 27.3 (b), the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), and protection of traditional knowledge and folklore.

According to trade officials, there was little change in the positions of delegations on all of these issues.

For the first time since the Paragraph 6 system was agreed in 2003, a whole day (27 October) was allocated for the agenda item of review under Paragraph 8 of the decision on the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.

(Paragraph 8 of the 30 August 2003 General Council Decision states: "The Council for TRIPS shall review annually the functioning of the system set out in this Decision with a view to ensuring its effective operation and shall annually report on its operation to the General Council. This review shall be deemed to fulfil the review requirements of Article IX: 4 of the WTO Agreement." Art. IX: 4 provides for an annual review by the Ministerial Conference, of any "waiver" granted by the Conference for more than one year.)

According to trade officials, while the TRIPS Council reviews how well the Paragraph 6 system is working every year in October, this year, it was agreed by Members that a whole day would be set aside to discuss the issue. (See SUNS #6945 dated 16 June 2010.)

The "Paragraph 6" solution is aimed at helping developing countries with insufficient or no manufacturing capacities in the pharmaceutical sector to import cheaper generic medicines produced under compulsory licensing.

For the first time, said trade officials, the discussion on the implementation of the Paragraph 6 system was also organized into topics to give it more focus. The topics included actual experiences, various legal aspects such as any domestic legislation needed and the international treaty process of accepting the TRIPS Agreement amendment (approved in 2005 to make permanent the 2003 decision), capacity-building, alternative ways of achieving access to medicines, as well as what to do next.

During the discussions, trade officials said that some developing countries continued to argue that the "Para 6" system must be too cumbersome since it has only been used once.

According to trade officials, India provided an account of an Indian generic drug manufacturer seeking compulsory licenses for three medicines to be exported to Nepal in September 2007. The request was swiftly dropped after the Indian company claimed that the conditions (of the system) were too onerous, India said.

Some developed countries, on the other hand, said that detailed information supplied by Canada shows that the system is not too cumbersome. They questioned whether attempts to use the Para 6 system that were subsequently withdrawn was because of the system itself or because of other reasons such as prices and competition from alternative suppliers.

According to trade officials, the developed countries in question asked India for details of what exactly the Indian company found to be too burdensome. They were of the view that too little information had been provided on what exactly might be the problems with the system other than the fact that it had only been used once, and that potential importing countries had not described their experiences.

They further argued that success should not be measured by the use of this one tool, but the full range of issues affecting access to medicines including health infrastructure, taxes and import duties, and the array of measures available to governments, such as new bulk procurement methods.

Australia said that the fact that there are alternative ways of making medicines affordable should not be taken as evidence that the "Para 6" system is a failure.

Some other countries, trade officials said, did not express a view either way, but asked questions about royalty payments (for example, Canada and Switzerland include the importing country's level of development in the formula) and how the medicine's efficacy and safety would be ensured when exporting countries use the system.

With regards to the experience of Members in using the system, Canada, which is the only country that has used the system as an exporter (to Rwanda), provided more detailed information. According to trade officials, Canada went on to describe its Access to Medicines Regime (CAMR, http://www.camr-rcam.gc.ca), which came into force in May 2005. It reiterated its assessment that CAMR was not the main cause of the length of time taken for Apotex's generic Apo-TriAvir to be approved for export under the Paragraph 6 system to Rwanda in 2008 and 2009.

Among the reasons cited by Canada were that Apotex did not have a buyer when it first sought approval for its generic medicine in 2006 and the procurement tender in Rwanda after the compulsory license had been issued in September 2007.

Canada said that the CAMR regime enabled the medicine to be approved in less than six months instead of the usual time of up to a year, and the compulsory license to be approved in 15 days in September 2007.

The requirement to negotiate a voluntary license with the patent holders first - GlaxoSmithKline, Boehringer Ingelheim and Shire BioChem Inc - was handled swiftly and the three companies waived the royalty payment that was eventually offered to them, said Canada, noting that Apotex eventually secured the deal to sell to Rwanda in the face of competition from other generics suppliers, by selling at below cost (19 cents per pill).

According to trade officials, Canada also rejected the arguments of some Members that anti-diversion conditions (preventing the medicines going to the wrong markets) are burdensome, since the colouring and labelling requirements and the need to publish information on a website were simple.

(According to trade officials, Rwanda did not contribute to the session.)

In its statement on the paragraph 6 system, China provided a brief introduction of its Revised Patent Law, and the process of merging the Paragraph 6 system into its patent legal framework. It said that it has implemented the paragraph 6 system in its domestic legislation.

According to trade officials, the World Health Organization (WHO), which has observer status in the TRIPS Council, told the meeting that the "Para 6" system will become more important, as newer HIV/AIDS medicines are needed in the future. Prices of "first line" treatments have fallen drastically because of competition from generics, allowing a 12-fold increase in poor patients receiving treatment. Newer treatments for HIV/AIDS, tuberculosis and cancer may need the system in the future in order to increase competition from generics, said the WHO.

According to trade officials, the WHO listed four factors affecting access to medicines: rational selection of medicines, for example, via the WHO model list of essential medicines; affordable prices; sustainable financing ("Per capita expenditure on medicines in real terms remains regrettably very low in poor countries," the WHO said); and reliable medicine supply systems -- forecasting needs, procurement, transportation, inventory and storage (which the WHO said "will remain a formidable challenge").

On the issue of prices, the WHO pointed out that 90% of medicines on its list of essential medicines are not under patent protection but a majority of patients in low-income countries cannot acquire them because of lack of supply of generics.

The WHO further said that competition from generics has slashed prices of "first line antiretroviral medicines" from over $10,000 per patient per year in 2002 to $100 in 2010. The "Para 6" system will become more important when newer medicines are needed, and should be used "once it becomes clear that no other possibility exists" for acquiring the medicines at affordable prices, the WHO said.

According to trade officials, the WTO Secretariat explained the legal difference between countries introducing laws to implement the Paragraph 6 system and their notifying the WTO that they have accepted the amendment. The two are separate and do not depend on each other, the secretariat said.

The amendment to the TRIPS agreement approved by Members in December 2005 that would make permanent the 2003 General Council Decision will take effect when two-thirds of the WTO's membership has accepted the amendment. While the original deadline for accomplishing this was until 1 December 2007, this was extended twice, with the new deadline now being 31 December 2011. So far, some 31 countries have accepted the amendment, with Uganda and Mongolia the latest to accept it since the last meeting of the TRIPS Council in June.

With respect to the implementation of laws or regulations, trade officials said that countries that have formally notified changes to their domestic laws or regulations are Norway (to export), Canada (to export), India (to export), the EU (to export), Hong Kong-China (to export, and to import in extreme urgency), Switzerland (to export), the Philippines (to import and export), and Singapore (to import in extreme urgency).

The Chair of the TRIPS Council, Mr Martin Glass of Hong Kong-China, described the review as a useful exchange of information. He said that he will consult with Members on what to do next. According to trade officials, as an annual review, the issue will again be on the TRIPS Council's agenda in October 2011.

Some Members would like a follow-up session in the next Council meeting in March 2011. Particularly, some developing countries also want a workshop that would allow pharmaceutical companies, non-governmental organizations (NGOs) and others to participate. These countries were of the view that some questions could not be answered in this review because companies and NGOs were not present.

The discussion on the triplet of issues, namely, review of Article 27.3 (b), TRIPS/CBD relationship, and protection of traditional knowledge and folklore, included a call from India and a number of other countries for the Secretariat of the Convention on Biological Diversity (CBD) to be invited to brief the next TRIPS Council meeting (in March 2011) on the latest round of CBD negotiations in Nagoya, Japan (which is taking place from 18-29 October).

According to trade officials, the US expressed opposition to the proposal on the grounds that the CBD is not an observer in the TRIPS Council (the US is also opposed to making the CBD an observer in the TRIPS Council).

The discussion on the triplet of issues largely echoed the debate in the June TRIPS Council meeting, said trade officials. (See SUNS #6945 dated 16 June 2010.) The focus was again on two related issues: the "disclosure" proposal (on amending the TRIPS Agreement to amongst others require patent applicants to disclose the origin of genetic resources and associated traditional knowledge), and a proposal from Bolivia calling for an urgent and in-depth review of Article 27.3 (b) to prohibit the patenting of all life-forms (IP/C/W/545).

According to trade officials, Members broadly agreed on the need to avoid "biopiracy" and "bad" patents that do not meet accepted standards. They also agreed that the principles of "access and benefit-sharing" (ABS) and "prior informed consent" (PIC) should be applied to intellectual property protection for inventions involving genetic material or traditional knowledge, or both.

There was however disagreement among Members over how to achieve this.

Speaking in favour of the "disclosure" proposal were: China, India, Cuba, Ecuador, Least Developed Countries (Angola speaking), Colombia, Indonesia, Peru, Uruguay, South Africa, Brazil, Egypt, the African Group (Nigeria speaking), Switzerland, the EU, and Norway.

Several Members called for Director-General Pascal Lamy to continue his consultations on this issue.

According to trade officials, speaking against the proposal were: Israel, Canada, Japan, Australia, Argentina, Korea, New Zealand, and the US.

Trade officials said that some countries either specifically opposed Bolivia's proposal for a ban on the patenting of all life-forms or described provisions in their laws allowing patenting for some types of life-forms (such as micro-organisms) or for biotechnology, in general. These countries included India, Brazil, Canada, Switzerland, Japan, Norway, Korea, and Chinese Taipei.

Meanwhile, the TRIPS Council met in Special Session on Thursday, whereby negotiators continued the fact-finding exercise they began in the last meeting in June providing more information on how key aspects of geographical indications protection work in their countries.

(The negotiations in the Special Session are on a multilateral register for geographical indications for wines and spirits.)

According to trade officials, following a procedure they had agreed on with the Chair, Ambassador Darlington Mwape of Zambia, the negotiators focussed on how information is taken into account and how this would be affected by the proposed register, and how they deal with the question of whether a term is generic and therefore, escapes protection.

The Chair has identified these as comfort-raising questions to be tackled under the heading of the legal effects or consequences of a term being registered, which he described as the biggest stumbling block to an agreement.

According to trade officials, Switzerland and Chile reported to the meeting on the TRIPS "brainstorming" sessions that were held among a small group of ambassadors as part of the so-called "cocktail" approach to moving the Doha talks forward. They said that they had asked the Secretariat to explain factually how WTO law (jurisprudence in dispute settlement cases) views the terms "prima facie", "burden of proof", and "due diligence".

Some Members said they would like the reply to be shared. Switzerland said that transparency would be respected. The Chair said that participants in the brainstorming groups would continue to report to the Members. +