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Patents, access to medicines and the WTO’s TRIPs Agreement Consultative meeting on incorporation of TRIPs Flexibilities Morogoro, Tanzania 24 July 2006 Tenu Avafia Regional Service centre UNDP What does this have to do with patents and the WTO TRIPs Agreement? What is the link between the TRIPs Agreement and access to ARVs? To answer this question, it is necessary to explore the relationship between Intellectual Property Right Holders and consumers Intellectual Property Rights / Patents What are patents? A patent gives the inventor the exclusive right to make, use, import, export, sell or market an invention in the country where the invention is patented. patenting an invention gives the patent owner a temporary monopoly over the invention. Patents governed by domestic and international law, particularly the TRIPs Agreement Patent Criteria In order to qualify for a patent, an invention has to meet three criteria: • it must be something new; • it must not be obvious but actually involve some sort of “inventive step,” • it must be usable. Both products and processes can be patented Indian generic companies rely on process patents New use patents have been common e.g. AZT or Viagra Are patents necessary to stimulate R & D? Need to balance rights of inventor and consumer Drug research and development extremely costly Some companies claim that a new successful drug can cost as much as US$ 800 million Actual costs unknown, US$150 million theory Companies would not engage in R&D if there was no incentive for them to do so. Patent/temporary monopoly is reward to patent holder for investing money, time and resources the WHO has noted that of the 1223 new drugs developed between 1975 and 1996, only 11 were for tropical diseases Are high costs of drugs justified? The high profit margins for patented drugs cannot be justified if we consider: drugs commercialized by multinational companies have often been developed with significant public subsidies, There are often large tax breaks for R&D Often, the research is done by public institutions like universities who sell patent to drug companies at clinical trial phase 5 first line drugs invented by universities There are proposals in circulation to allow governments to pay inventors for essential medicines and then to own the IPR UK Government suggestion of prize fund The problem with profit driven patent system all of Africa accounts for the consumption of about 2% of global pharmaceutical profits a profit driven system based on private patent rights provides an incentive to develop money making drugs Even Indian generic companies are shifting their efforts to Western diseases for greater profit Initiatives other than patent incentives are required to stimulate R&D into diseases affecting mainly developing countries. Medical R&D Treaty proposal Who can afford a vigorous patent system? 50000 15000 10000 5000 0 ia 20000 hi op 25000 ol a Et 30000 An g 35000 SA 40000 Ja p Au an st ra l Po ia rtu ga l Br az il 1 Luxembourg U$ 45 778 4 USA U$ 36 731 7 Japan U$ 31 433 22 Australia U$ 22 462 31 Portugal U$ 12 200 66 Brazil U$ 2 610 68 South Africa U$ 2 408 107 Angola U$ 892 163 Ethiopia U$ 191 US A 45000 Lu x Global Ranking of GDP in 2003 Problems with “one size fits all” patent system Country Patents per million (1998) Japan 994 USA Netherland s South Africa Brazil Mexico 289 196 2.5 2 1 Graph clearly shows where a strong system of patent protection is most advantageous Participation in patent system has had largely negative results for developing countries to date Few developing country patent offices conduct patent examinations In most instances, development objectives in African countries are constrained by IP protection Patents & Access to treatment Domestic laws that favour patented drugs over generic drugs can stifle competition Less competition = higher prices Higher prices = less access Patents are one of the bottlenecks inhibiting access Many countries still use patented drugs instead of generics Sustainability of programs sustained by donations of patented drugs e.g. PEPFAR What is TRIPs? Agreement on Trade-Related Aspects of Intellectual Property Rights One of 3 principle agreements of the World Trade Organization (WTO ) Sets out rules for intellectual property rights that all countries who belong to the WTO Not optional Article 33 protects the rights of patent holders for a MINIMUM period of 20 years patents must be individually registered in the Country where protection is sought. TRIPs and Generics If a particular drug is: Not patented; or “off patent” i.e. patent has expired someone else may legally make, import or sell that drug or its equivalent Generic drugs are interchangeable versions of patented (brand name) drugs. Generics almost always result in reduced drug prices Less R&D costs involved Quality varies but WHO EML includes several generics Developing country views of TRIPs TRIPs only 10 years old Developing countries still coming to terms with TRIPs implementation Not aware of far reaching implications of TRIPs during negotiations Most developed countries did not implement pharmaceutical patents until industries were developed Patent rights were often ignored for technological advances e.g. Wright brothers Options under TRIPs to improve Treatment Access – “flexibility” Exclusions from or limitation of patentability Article 65 transitional period until 2016 for LDCs Pre-grant oppositions Parallel importation General exceptions (e.g. Bolar provision and experimental use) Anti-Competitive remedy Compulsory Licensing (clarified by Doha Declaration) 30 August Agreement Doha Declaration on TRIPs and Public Health Before Doha Declaration, every attempt to use TRIPs flexibility fiercely opposed by Research based drug companies PMA v President of South Africa; US- Brazil WTO dispute are examples Doha Declaration adopted at a Ministerial meeting, November 2001 TRIPS "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, to promote access to medicines for all.“ Officially allowed compulsory licensing What if you do not have manufacturing capacity? 30 August 2003 Agreement Doha Declaration on TRIPs was not useful to most countries in Africa Most African countries do not have manufacturing capacity 30 August 2003 WTO General Council Decision allowed countries without manufacturing capacity to import generics produced under compulsory license WTO notification mechanism under 30 August has not been used to date for the possible reasons: i) Mechanism deemed to be administratively burdensome ii) Fears of adverse impact on aid and FDI; and iii) lack of capacity to comply with Decision e.g. to prevent re-exportation Nonetheless, it has allowed countries to negotiate lower prices with patent producing companies Article 31 amendment of December 2005 30 August 2003 Decision formed basis of Article 31 amendment of TRIPs Agreed just few days before Hong Kong Ministerial Controversial as it endorses a system that has not been proven to work Exporting member must: a) export entire production to importing member b) products must bear distinctive features c) licensee must post on website quantities being supplied to each destination d) exporting member must notify WTO about specifics of license and conditions attached Both countries are expected to ensure that adequate compensation is paid in exporting member Ratification of Amendment deadline set for 2007, must get 2/3 WTO membership approval which is unlikely But for now, this is the only available mechanism