[Ip-health] US Position on Paragraph 6 of Doha Declaration

[James Love]

Non Paper presented by US government at the WTO 
TRIPS council meeting .... Jamie

 PARAGRAPH 6 OF THE DOHA DECLARATION ON 
 THE TRIPS AGREEMENT
AND PUBLIC HEALTH


We are committed to helping countries that are experiencing
public health crises.   We want to find a real solution to
problems that prevent Members from being able to address health
problems associated with access to pharmaceuticals.  We want all
Members to be able to use the full flexibility of the TRIPS
Agreement to help provide their citizens access to affordable
medicines in times of crises.

We note that the Doha TRIPS declaration recognizes that the
exclusive rights provided by patents are an important incentive
to development of new drugs.  Patents provide market incentives
for innovators to risk time, energy and resources to develop and
bring to market new technology.  A system of patent rights and
enforcement of those rights for pharmaceuticals provides numerous
benefits to society; the availability of exclusive patent rights
for pharmaceutical products spurs research and development of new
medicines, including those resulting from biotechnology, to treat
and cure diseases.  The TRIPS Agreement recognizes that
compelling innovators to relinquish patent exclusivity is a
limited remedy for special circumstances.  Clearly, under TRIPS,
compulsory licenses are appropriate, but it must be borne in mind
that these are exceptions, rather than the norm.

The TRIPS Agreement allows Members to use compulsory licenses, if
they wish,  to help address supply problems that can arise during
health crises. The Agreement establishes conditions for the use
of compulsory licenses that ensure these licenses will be limited
and carefully drawn.  The Agreement also recognizes that time is
of the essence in a national emergency or other circumstances of
extreme urgency by waiving the requirement to seek first a
voluntary license from the patent owner.

In paragraph 6 of the Doha Ministerial Declaration on the TRIPS
Agreement and Public Health, Ministers recognized that certain
WTO Members, those with "insufficient or no manufacturing
capacities in the pharmaceutical sector," could have difficulty
using the compulsory licensing provisions of the TRIPS Agreement.
The TRIPS Council is instructed to find an expeditious solution
to this potential problem and report to the General Council
before the end of 2002.

Obviously, many factors must be addressed in helping countries
with limited means address public health problems.  Among these
factors are issues of infrastructure, financing, elimination of
impediments such as tariffs and internal taxes, training, etc.,
most of which must be addressed in other appropriate fora.  In
addition, all countries must recognize that there are many people
in the world who are unable to afford needed medicines at any
price and under any TRIPS-related solution there would still
involve a cost.1  It is for those who cannot afford needed
medicines that the Global Fund is essential and we encourage all
countries that can to contribute to that fund and for those
countries that can benefit from the fund to avail themselves of
it.
Considerations for Developing an Expeditious Solution

It must be kept in mind, when considering particular TRIPS
provisions related to patents, as is the case here, that TRIPS
obligations exist only when a patent exists.  If an innovator has
chosen not to obtain rights for a pharmaceutical invention in a
particular market, if a country does not currently provide patent
protection for pharmaceutical products,2 or if the patent on a
particular medicine in that market has expired,3 anyone may make,
use, offer for sale, sell the product in that market, or import
the product involved into the market, or use the process.  They
also may produce the product for export.

The Council should, in carrying out its work under paragraph 6,
develop information regarding where patents exist currently on
pharmaceuticals to treat the diseases cited in the Declaration
afflicting poor countries that lack or have insufficient
manufacturing capacities in the pharmaceutical sector. This
information will provide Members with an idea of the scope of the
potential problem and help us formulate a practical solution.

We note that there are developing countries (i.e., those taking
advantage of the Article 65.4, that possess the technological
capability to manufacture pharmaceuticals and are not, and will
not be, subject to Article 31(f) TRIPS requirements until 2005.
In the event a patent exists on a needed pharmaceutical in the
territory of a Member that lacks or has insufficient
manufacturing capacities, that Member may grant a compulsory
license to import and distribute foreign-manufactured product on
its local market, including from the developing countries
currently taking advantage of the provisions of Article 65.4.
The expeditious solution the TRIPS Council must devise,
therefore, will apply for the most part to situations arising no
earlier than January 1, 2005.

Obviously, even if a patent existed in a country that lacked or
had insufficient capacities for manufacture in the pharmaceutical
sector, the country would have no need for compulsory licensing
if the patentee is supplying the market in sufficient quantities
at prices equal to or lower than the cost of drugs obtained using
a compulsory license.4  Similarly, if there is no patent in force
in the country in need, the country would have no need to employ
the solution if generic pharmaceuticals were available. Whenever
possible, the country ought first, before granting a compulsory
license, seek accommodation from the patent owner in order to be
assured of a supply of quality product.

Paragraph 1 of the Ministerial Declaration on the TRIPS Agreement
and Public Health makes clear that Ministers were addressing
"public health problems," with special reference to "those
resulting from HIV/AIDS, tuberculosis, malaria and other
epidemics." The Ministers' direction in paragraph 6, to seek an
expeditious solution to potential problems,  is limited to the
pharmaceutical sector. The significance of discussions relating
to modifying the TRIPS Agreement, thereby altering the
equilibrium of concessions arrived at under the Uruguay Round,
should not be discounted.  Therefore, the Council should focus on
fashioning a solution to improve access to pharmaceuticals to
treat diseases  referred to in the Declaration, such as HIV/AIDS,
malaria, tuberculosis and other epidemics.
     
The phrase "with insufficient or no manufacturing capacities in
the pharmaceutical sector" will have to be analyzed in connection
with any solution.   We do not believe it is appropriate to
extend this solution to developed countries or to countries that
choose not to manufacture certain drugs based on policy, economic
or other reasons.  This solution should reach out to those poor
countries that are truly not capable of manufacturing sufficient
supplies of needed pharmaceuticals.  In this connection, we think
it would be helpful for more information to be gathered for
consideration by the Council with respect to current levels of
pharmaceutical manufacturing capacity worldwide such as the work
already done by the United Nations Industrial Development
Organization.

In summary, we reiterate our firm belief that the application of
an expeditious solution to access to pharmaceuticals should be
applied to address diseases referred to in the Declaration, such
as HIV/AIDS, malaria, tuberculosis and other epidemics in poor
countries that lack sufficient pharmaceutical manufacturing
capacities.

One further question to consider is whether it would be
appropriate for this solution to be employed by entities other
than government or other non-commercial actors, (e.g., commercial
entities for profit). Given that we are trying to address
situations where access to pharmaceuticals is required so that
governments and other non-commercial actors can address major
health problems afflicting their populations, we seriously
question whether there are any circumstances under which this
solution should employed by commercial entities on a for-profit
basis.

Safeguards to Ensure that the Solution Is Effective

In order to ensure that an expeditious solution is effective in
addressing the situation identified in paragraph 6 of the
Ministerial Declaration on the TRIPS Agreement and Public Health,
the TRIPS Council will need to monitor the application of the
solution in each case, and the results are achieved.  Any
solution devised should, therefore, include a means for informing
the Council when the solution is being employed and for providing
ongoing information regarding the nature and quantity of
pharmaceuticals being exported to a Member, the numbers of people
benefiting from the solution, and the results achieved,  and any
evidence of diversion of products authorized for production under
the solution.

We believe that the TRIPS Council must develop, as part of any
solution, a commitment by all Members to take the necessary steps
to prevent diversion of the relevant pharmaceuticals.  Likewise,
the entire output of the relevant pharmaceuticals manufactured
subject to the compulsory license should be exported to the
Member in need.  Whenever a particular pharmaceutical or
pharmaceuticals are being supplied to a Member through
application of the solution devised by the TRIPS Council, all
Members should have an obligation to ensure that the medicines in
question are not diverted from the Member's citizens for whom
they were intended into other countries. The submission of
information mentioned earlier would alert all WTO Members of the
particular medicines involved, their source and destination, and
the quantities involved, thereby enabling the Members to take
appropriate steps to prevent diversion into their markets.  It
should be noted as well, that notification of the right holder as
provided in Article 31(b) will aid in ensuring that action is
taken with respect to any diversion to markets in which patents
exist.


Proposals to Date

In carrying out the task assigned by Ministers in paragraph 6 of
the Declaration, the Council should seek the solution least
prejudicial to balance of rights and obligations negotiated
during the Uruguay Round.  Absent such an approach, it will be
difficult to achieve agreement in future rounds of multilateral
trade negotiations, since Members will not be able to have
confidence that rights and obligations will be respected.

Article 30

One suggestion made prior to Doha involved an interpretation of
Article 30 to include a limited exception to patent rights for
export of medicines to countries lacking or having insufficient
manufacturing capacities in the pharmaceutical sector.  Article
30 authorizes limited exceptions to patent rights, for such
things as research exemptions, prior user rights, pre-expiration
testing, so long as those exceptions do not unreasonably conflict
with a normal exploitation of the patent and do not unreasonably
prejudice the legitimate interests of the patent owner, taking
account of the legitimate interests of third parties.  The
limited exceptions to patent rights authorized by Article 30 do
not require a government decision in each case.  Article 30
contains no requirements for notifying a patent owner of use, for
establishing particular terms and conditions, for expiration if
circumstances change, or for remuneration to the patent holder.
We believe that an interpretation of Article 30 to allow
exceptions to patent rights to permit otherwise infringing acts
to supply a patented pharmaceutical for purposes of export would
seriously prejudice the rights and obligations of Members  under
the TRIPS Agreement.

Article 31

Another proposal that has been discussed calls for interpretation
or amendment of Article 31(f) in order to permit a Member to
grant a compulsory license under an existing patent to a local
manufacturer for purposes of export to a Member that lacks or has
insufficient manufacturing capacities in the pharmaceutical
sector.  Because Article 31 already establishes agreed terms and
conditions for compulsory licensing to ensure balance in
situations in which use is permitted without authorization of the
patent owner, consideration of solutions based on  Article 31 as
a whole have merit.

For example, Article 31 requires that decisions on compulsory
licensing be made case by case; that, except in cases of national
emergency or other urgent circumstance, or of government non-
commercial use, the potential licensee attempt first to negotiate
a voluntary license with the patentee; that the compulsory
license be non-exclusive; that the license spell out the term and
conditions; that when those conditions cease, the license
expires; that the patentee be paid "adequate remuneration" in the
circumstances of each case, taking into account the economic
value of the authorization.

One approach to examine in considering a solution based on
Article 31 would be for Members to agree to a moratorium on
dispute settlement in instances in which a Member grants a
compulsory license, under circumstances clearly delineated by
this Council, for purposes of export to a poor country that lacks
or has insufficient manufacturing capacities in the
pharmaceutical sector.  Such an agreement would not require
amendment of the TRIPs Agreement and application of the solution
could be overseen by the TRIPS Council, including to insure that
medicine being supplied to a Member that lacks or has
insufficient manufacturing capacity is not diverted into other
markets, away from the people it is intended to help.  It is
worth considering whether such a solution would not in fact be
the most expeditious and least prejudicial to the rights and
obligations of Members under the Agreement.
_______________________________
1    See discussion on access to medicine in Macroeconomics and
Health: Investing in Health and Economic Development, Report of
the Commission on Macroeconomics and Health, 20 December 2001,
chaired by Jeffrey D. Sachs: "The poor lack access to essential
medicines for many reasons, all of which must be addressed in a
comprehensive manner.  The most important reason, by far, is
poverty itself...in the absence of large-scale donor support,
poor countries in sub-Saharan Africa with high HIV/AIDS
prevalence have been unable to avail themselves, at any
significant scale, of these lower prices.  The same problems are
observed in the access to TB drugs, even those that are off
patent, as well as many vaccines that are off patent yet still
too expensive for use in the low-income countries in the absence
of adequate donor financing."
2    As is the case currently with India and a number of other
developing and least developed countries.  Developing countries
availing themselves of the transition period permitted under
Article 65.4 will not be obliged to provide patent protection for
pharmaceutical products until 2005.
3    Either because the term has ended or because the patentee
has not paid the maintenance fees.
4    We note that a component of the overall price of a drug
obtained pursuant to a compulsory license will be an amount
associated with the required payment of adequate remuneration to
the right holder.