[e-drug] ATM: willingness and ability to utilise TRIPS flexibilities

["E-Drug" <e-drug@healthnet.org>]

E-DRUG: ATM: willingness and ability to utilise TRIPS flexibilities
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[As mentioned yesterday, DFID released a series
of papers on Access to Medicines and a number of issues that are
regularly addressed on this and other lists: intellectual property,
technology transfer, domestic production, pricing, ARVs in resource-poor
settings.

The papers can all be found at the DFID website here:
http://www.dfidhealthrc.org/shared/know_the/publications.html

The ip-health list and the e-drug list are each going to post the
executive summaries of each paper one by one, inviting comments from our
subscribers. Messages are being crossposted from/to IP-Health, WB]

The first paper is "Processes and issues for improving access to
medicines: willingness and ability to utilise TRIPS flexibilities in
non-producing countries," by Brook Baker. 

It was written to address the following questions:

"TRIPS, the Doha Declaration, and the Aug. 30 Decision enable countries
with public health needs and with insufficient capacity to manufacture a
needed medicine to import lower-cost products from other countries.
Although "non-producing" countries have multiple flexibilities for
sourcing medicines, what are the advantages and disadvantages of each?
What legislative and policy measures must importing countries and
exporting countries take to make these flexibilities more useable? What
dangers must developing countries avoid in on-going trade negotiations?
And what can and should donors do to expedite access to medicines?

This paper addresses varied ways by which a non-producing country may
lawfully utilise TRIPS flexibilities, and looks at the internal and
external forces which negatively affect non-producing countries ability
and willingness to use TRIPS-compliant flexibilities."

Full text:
http://www.dfidhealthrc.org/shared/publications/Issues_papers/ATM/Baker.pdf
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KEY MESSAGES:

 Globalised patent rights permit pharmaceutical companies to exclude
lower-cost generic competitors and thus to set profit-maximising,
monopoly prices.

 Expanded protection for drug registration data, e.g., data
exclusivity, also delays generic entry thereby reducing price competition.

 The higher prices resulting from patents and data protection decrease
access to medicines for poor consumers in developing countries.

 There is a looming crisis in accessing generic medicines in 2005 when
leading generic producers, like India, must observe stricter patent
protections for newer medicines.

 Accordingly, developing countries have an interest in using all lawful
means to avoid patent and registration data barriers.

 Non-producing countries, countries with limited or inefficient
capacity in their pharmaceutical sector for particular products, have a
special interest in securing lawful sources of imports from foreign
generic producers.

 Although a variety of options exists for accessing cheaper generic
medicines of assured quality, e.g., parallel importation, compulsory
licenses and the new WTO production-for-export system, there are many
remaining barriers to access that must be addressed.

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EXECUTIVE SUMMARY:

The burden of disease in developing countries is staggering, and that
burden is exacerbated by inadequate access to skilled medical care and
to medicines routinely used to treat and cure illness in richer
countries. There are many explanations for this lack of access 
widespread poverty, weak health systems and governmental neglect, both
in developing and developed countries  but an additional, first-order
explanation lies in the labyrinth structures of the international
intellectual property regime including (1) the patenting and pricing of
medicines [1] and (2) data exclusivity and marketing exclusivity rules
that delay registration and sale of generic medicines.[2]

In starkest terms, the current, expansive system of internationalised
intellectual property rights (IPRs) means that research-based drug
companies can obtain patents that grant them exclusive territorial
rights to market innovative pharmaceutical processes and products almost
everywhere in the world. [4] In turn, these globalised patent rights
permit pharmaceutical companies to exclude low-cost generic competitors
and to set profit-maximising, monopoly prices. In addition to having
expanded their patent rights internationally, research-based companies
are gaining increased protection for data submitted to drug regulators
for purposes of establishing the safety, efficacy and quality of their
medicines. In particular, an expanded right of data exclusivity
threatens to preclude registration of generic medicines even when patent
rights are bypassed through lawful means. This is because the follow-on
producer and drug regulators cannot use the earlier registrants data
(or the fact of prior registration) to establish the safety and efficacy
of the follow-on product even if it is proven bioequivalent. Although
this intertwined system of intellectual property protections for
patents, data and their associated high prices is often defended as
providing resources and incentives for research and development for the
next generation of life-saving medicines, there is little doubt that
higher prices affect access to existing (and future) medicines that are
often unaffordable to developing countries and their impoverished residents.

Drug companies intellectual property rights affect all developing
countries, but their impact is most pernicious in non-producing
countries (NPCs)  countries that lack sufficient and efficient capacity
to manufacture particular medicines locally and which must rely on
foreign sources of supply even when they lawfully grant exceptions to
patent rights on a specific medicine. This negative impact on the
ability to import medicines reaches new heights in 2005, when all
non-least-developed country WTO Member States will be obligated to grant
patents on pharmaceutical products. Thus, important generic suppliers,
like India, which have lawfully reverse-engineered and produced generic
medicines of assured quality,[5] will no longer be able to produce and
export post-1994/1995 patented medicines.[6] Accordingly, important
sources of supply of low-cost, newer medicines for non-producing
countries will be seriously constrained.

Despite the challenge arising in 2005, non-producing countries with
inefficient or insufficient capacity in their pharmaceutical sectors
have a variety of options for sourcing medicines from abroad. Some
sourcing options, like those permitting export from and import to
countries where a particular medicine is not patented, those permitting
parallel-importation of patented medicines that have previously been
sold in another country and those permitting varying quantities of
medicines to be produced pursuant compulsory licenses and thereafter to
be exported, were authorised in the original TRIPS Agreement and
clarified further in the 2001 Doha Declaration on the TRIPS Agreement
and Public Health. However, since most compulsory licenses are subject
to the requirement that drugs be supplied predominantly for the domestic
market (except competition-based compulsory licenses granted according
to Article 31(k)), compulsory licensing of newer medicines for export to
non-producing countries will face a bottleneck condition in 2005. This
bottleneck was addressed in the recent WTO Paragraph 6 Decision of 30
August 2003 (Paragraph 6 Decision), which produced a cumbersome, but
potentially important mechanism for allowing trade in low-cost generic
medicines.

This paper addresses varied ways by which a non-producing country may
lawfully utilise TRIPS flexibilities, primarily by importing. However,
it also briefly discusses means for promoting local production through
pharmaceutical capacity building and through both compulsory and
voluntary licensing. To aid decision-makers in understanding and
evaluating the opportunities and constraints of each alternative, the
paper briefly describes their respective advantages and disadvantages in
terms of developing countries sustainable access to more affordable
medicines, highlighting differing legal interpretations, political
realities and pragmatic administrative and economic constraints.[7]
Attached, as an Appendix, is a series of flowcharts summarising the
analytical decisions least-developed countries (LDCs) and other
non-producing countries must make as they assess options for importing
lower cost generic medicines of assured quality in light of TRIPS
flexibilities, depending on the patent status of the medicines in both
the importing and exporting country.

Non-producing countries ability and willingness to use TRIPS-compliant
flexibilities is negatively affected by a number of internal and
external forces.

 The first major barrier is informational  confusion about the
existing range of options for accessing cheaper generic medicines and
uncertainty about patent status of particular medicines both in the
importing non-producing country and in potential exporting countries.

 A second internal barrier is non-producing countries limited
technical capacity and willingness to amend their domestic laws to allow
flexibility for procuring medicines and their constrained ability to
amass and support the regulatory expertise necessary to administer those
newly enacted flexibilities.

 The third barrier is external and concerns export capacity, namely the
small number of no-patent and no-product-patent countries capable of
exporting medicines of assured quality, the closing window for major
generic producers like India as of 2005, and the uncertainty that
producer countries will be willing and able to authorise and then
process a large number of compulsory licenses for unlimited export under
a competition-based compulsory license, nonpredominant- quantity exports
under an ordinary Article 31(b) compulsory license or quantity-specified
exports under a Paragraph 6 Decision compulsory license.

 The fourth barrier is also external and overtly political  it
consists of the continuing efforts of developed countries, acting at the
behest of their researchbased pharmaceutical industries, to interpret
TRIPS flexibilities narrowly and to use trade and diplomatic pressure to
deter non-producing countries from using the flexibilities that exist.
This pressure is augmented by threats from industry about the impact of
vigorous compulsory licensing schemes and eased drug registration for
follow-on products on the future availability of patented medicines and
on foreign investment both in the pharmaceutical sector and elsewhere.
Even more problematic than trade/diplomatic pressure and investment
threats is developed countries pursuit of bilateral and regional free
trade agreements that bargain away developing countries flexibilities
to bypass patents and that raise new barriers to access to medicines
particularly with respect to registration requirements.

Despite these barriers to utilising existing flexibilities for accessing
medicines, in its more reform-based section, the paper analyses some
in-country and regional intellectual property policy options for
non-producing countries that might increase access to medicines, including:

 Eliminating the import/export patent-information thicket;

 Enacting TRIPS-compliant patent law reform in each country;

 Coordinating domestic compulsory licensing schemes, voluntary
licensing regulations and competition policy;

 Easing issuance of competition-based compulsory licenses;

 Avoiding market segmentation between private and public sector health
care and encouraging integration of drug procurement;

 Cooperating regionally to develop pro-health intellectual property and
trade policy, to investigate joint compulsory licensing applications and
to promote regional trade in generic medicines, especially within
trading groups with 50% LDCs;

 Cooperating regionally to negotiate high-quality voluntary licenses
that facilitate entry of multiple competitors, assure access to
registration data, grant permission for cross-licensing of fixed-dose
combination medicines and promote technology transfer;

 Cooperating regionally on drug registration to ensure marketing of
drugs of assured quality, with preferential and expedited registration
of medicines prequalified by the WHO and regional cooperation in
post-marketing quality assurance;

 Creating regional mechanisms for pooled procurement;

 Investing in regional productive capacity and development of
indigenous expertise with a special commitment to research and
development for neglected diseases;

 Creating demand for access to medicines by supporting the Global Fund,
the WHO 3-by-5 Plan and other global health initiatives, and by
supporting the involvement of affected communities and NGO activists in
IPR policy debates.

The paper concludes with options for policy-makers in the United Kingdom
to adopt additional measures designed to aid non-producing countries
access to medicines, including:

 providing high-level technical assistance to non-producing countries
and regions,

 promoting an Article 30 exception for production for export,

 encouraging the development of a competitive, high-quality generic
industry,

 encouraging widespread licensing and technology transfer to developing
countries for production of essential medicines, and

 considering life-saving medicines to be international public goods and
requiring more research into neglected diseases and affordable access to
medical innovations.