“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 told a World Trade Organization committee this week, referring to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Intellectual property rights are often seen as a promoter of innovation through the lens of most developed countries, and as a potential barrier for developing countries, struggling to address public interest needs, in particular meeting their public health obligations. This week the intellectual property committee of the World Trade Organization discussed a new topic brought on by some developing countries, underlining the difficulties met by some in seeking to use the flexibilities provided by the WTO IP rules, in particular compulsory licences.
The WTO Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) was held on 13 June, finishing in one day. The council elected a new chair for the year: Irene Young, permanent representative of Hong Kong.
TRIPS Council meetings are held in closed-door sessions despite the apparent absence of sensitive issues on the agenda.
IP and Public Interest, Access to Medicines Jeopardised
A newcomer this week was an item [pdf] on IP and the public interest, with a focus on compulsory licences. Compulsory licences, in the health area, are steps taken by a government after negotiations with a pharmaceutical company to lower prices of a particular medicine have failed, in order to have the medicine manufactured by a generic company.
IP and the public interest was put forward by Brazil, China, Fiji, India, and South Africa.
India, according to its statement, gave the example of antiretroviral medicines to treat HIV/AIDS which “were priced beyond the reach of most people who needed them in developing countries,” in the 1980s and 1990s.
Flexibilities included in the TRIPS Agreement, such as compulsory licences, were used by countries like Brazil, Thailand, South Africa and others to bring prices down, India said, further noting that the TRIPS Agreement implicitly says that WTO members have the freedom to determine the grounds upon which compulsory licences are granted.
So far India has issued only one compulsory licence, the Indian delegate said, for Bayer’s drug sorefenib tosylate (Nexavar) used for the treatment of kidney and liver cancer, which allowed the price of the medicine to drop from US$4,370 for a month’s treatment, to US$135 a month.
According to his statement, the Indian delegate presented several cases of use of compulsory licences in developed WTO members. Referencing a 2009 article on “Compulsory licensing of patented pharmaceutical inventions: evaluating the options,” the delegate said the United States threatened Bayer with a compulsory licence on ciprofloxacin in 2001, “which the US intended to stockpile as a defence against anthrax,” leading Bayer to “drastically” lower its price.
The Indian delegate remarked on the difficulty for developing countries to make use of compulsory licences, for reasons including capacity constraints, and political and economic pressures from states and corporations, echoing the recent findings of the United Nations Secretary General’s High-Level Panel on Access to Medicines.
“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,” he said.
Brazil, in its statement, said IP addresses the public interest by providing incentives for innovation. However, governments “have the responsibility of safeguarding the public against a potential negative impact, notably on competition.”
A flexible policy space is necessary for each member state to develop and adapt the set of IP regulations which are the most fitting to its reality, Brazil said, adding that exceptions and limitations to IP rights give the necessary flexibility to increase societal welfare without prejudicing the legitimate interests of patent owners.
“The judicious use of compulsory licenses assists countries to uphold the delicate balance of the TRIPS Agreement,” the delegate said, adding that Brazil issued its first and only compulsory licence for the antiretroviral efavirenz to treat HIV/AIDS, after negotiations with the patent owner failed.
Despite the fact that Brazil “strictly” followed the international legal framework, “the Brazilian Government faced legal disputes in national courts,” initiated by the patent owner, which were unsuccessful. Brazil could reduce the price of Efavirenz from US$1.59 to US$0.45 per tablet.
Brazil also mentioned the High-Level Panel and its recommendations. Respect for IP and the promotion of the public interest are not mutually exclusive, the delegate said.
US, EU, Switzerland: IP system Flexible Enough
Some 15 delegations took the floor on the issue, according to a source. The United States warned against the potential negative effects of the co-sponsors’ view of public interest, as it could discourage members to establish and maintain robust domestic IP regimes, and jeopardising innovation, according to the source.
Compulsory licensing diminishes the patent monopoly, thus undermining the incentive for innovation and investment, the US said, according to the source.
A developing country source told Intellectual Property Watch that the European Union said the TRIPS Agreement is providing an adequate balance between IP owners and the public interest.
Switzerland, according to its statement said public interest is a very important topic, and the current system of IP protection fully integrates a balance between private and public interest.
The Swiss delegate also added that patents only grant so-called “negative rights,” by preventing others to use the patent owner’s invention without authorisation. He added that a patent does not confer a discretionary power over pricing, but the IP system is based on the fact that investment in research and development and the marketing of innovative medical products are financed through the patent system through exclusive rights’ revenues.
Switzerland also said that the country is currently financing a feasibility study conducted by the Medicines Patent Pool, which looks into the challenges and opportunities of potentially expanding the MPP business model.
According to sources, other items in relation to IP and the public interest might be submitted at future sessions of the TRIPS Council.
IP for Innovation: Small Enterprises Need to Step Up
Another agenda item requested by some WTO members included one item [pdf] seeking to exchange views on intellectual property and innovation, in particular inclusive innovation and micro, small and medium enterprises (MSMEs) and growth. Agenda items on IP and innovation have become a regular item at the TRIPS Council.
This week the IP and innovation item was proposed by Australia, Canada, the European Union, Japan, Singapore, Switzerland, Taiwan, and the United States.
According to sources, cosponsors gave detailed statements illustrating the fact that MSMEs are not making use of IP, but when they do, they often have higher revenue and a better growth potential. According to a source, cosponsors suggested that this theme be further discussed in the future.
According to the source, India noted that the formal IP system based on exclusion and proprietary knowledge is not compatible with the diffusion of knowledge. The evidence does not support the assertion that increasing patent monopolies drives innovation, India further said, according to the source.
Non-Violation Complaints: Standstill
Non-violation complaints refer to disputes between members in cases where a member considers that another member’s actions have led to loss of expected benefits, despite not violating a WTO agreement.
A current moratorium prevents that form of complaints for IP issues at WTO. It has been renewed every two years. Most WTO members insist they would like the moratorium extended indefinitely. The United States and Switzerland, on the contrary, would like the moratorium lifted permanently.
Several sources told Intellectual Property Watch that the US and the Swiss positions have not changed. However, the issue will come up again in December, during the WTO Ministerial Conference, as the TRIPS Council was tasked to find a solution ready for consideration at this time.
Switzerland, according to its statement, said the TRIPS agreement forms an integral part of the WTO framework as well as the dispute settlement mechanism.
The Swiss delegate dispelled concerns voiced by India during previous sessions of the council, about the risk of reducing member’s regulatory policy space if non-violation claims on IP were brought in. He said non-violation complaints are regarded as exceptional remedy, and the standards and requirements for bringing forward a non-violation complaint are likely to be very high.
CBD Presentation Still Banned from TRIPS by US
The US has regularly opposed requests by several countries over the last sessions of the TRIPS Council to have the secretariat of the UN Convention on Biological Diversity give a presentation on its Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization, sources told Intellectual Property Watch.
A suggestion for an informal presentation was also opposed by the US, they said. According to a source, South Africa suggested that the option of holding a side event at a future Council meeting might be a solution.