[Ip-health] IP-Watch: Pandemic Fears Raise Questions About WTO Health Waiver Opt-Out

[James Love]

The following is a story from ip-watch about the "opt-out" of the WTO
waiver to export medicines manufactured under a compulsory license.
It is the only extensive report on this topic by any journalist, and
it adds some new details that have not been reported or generally
known.  I'll complain about a few things in the story, however.   One
is that the story doesn't bother to mention anything that CPTech has
done on this issue, including for example requesting meetings with
USTR or DG-Trade, which we still intend to pursue.   The story says
that there is no patent in India, and suggests India can freely
export without the 30 aug 03 export waiver.  But this will likely
only be true until the Gillead/Roche mailbox patents on Tamiflu are
granted, making the 30 aug 03 export waiver highly relevant for
anyone wanting to import from such places as Canada, Taiwan, Korea or
India.    This is a major issue right now, given the fact that these
are the countries that may be the most likely to be able to
manufacture the APIs for the drug at this time.   The story could
have also have explored the issue of the legal consequences of the
EU's proposal for a permanent amendment to the TRIPS, and gotten
somebody on the record about whether or not  the EU proposal would
lock in the 33 countries who have opt-ed out, if Hong Kong adapts a
permanent amendment, or if these countries could just send a fax to
the WTO to opt-back in at any time.  This is a pretty important
question, and an interesting time to ask it.

   Jamie

http://www.ip-watch.org/weblog/index.php?p=3D122&res=3D1024_ff&print=3D0

Pandemic Fears Raise Questions About WTO Health Waiver Opt-Out
WTO/TRIPS
posted by William New @ 10:40 pm <27/10/2005

As nations prepare for a possible avian flu pandemic, some observers
are raising questions about a seemingly obscure footnote in
international trade law under which dozens of governments have agreed
not to import cheap generic drugs made for poor countries.

The concern is that the provision could make it difficult for those
developed countries to obtain sufficient amounts of critical drugs in
time to address a widespread health emergency. But the countries
signing up for the provision themselves have not been publicly among
those raising the concern.

At issue is a footnote to a 30 August 2003 temporary waiver of a
provision in the World Trade Organization Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS).

The WTO TRIPS Council is under mandate to find a way to make the
waiver permanent in the TRIPS agreement. But no agreement on
permanency has been reachable at the 25-28 October TRIPS Council
meeting, so the issue was suspended by the chairman and sent back to
informal consultations between the council chairman, the group of
African nations, the European Union and the United States. These
countries were dubbed by the chairman the interested parties.

Several other countries, such as Argentina, Brazil and India, have
called for the discussions to be opened up to more countries.

Under TRIPS, WTO members are permitted to issue compulsory licenses
for products they deem necessary for domestic public health. Under a
compulsory license, the patent on a product is exhausted so it can be
produced locally.

But some countries that may need drugs lack the capacity to produce
them, a fact acknowledged under paragraph 6 of the 2001 Doha
Declaration on Public Health, which mandated the issue be addressed.
WTO members agreed on 30 August 2003 to the temporary waiver of TRIPS
Article 31(f), which requires predominantly all products produced
under compulsory license to be used domestically.

When that agreement was reached, the WTO General Council chairman at
the time read out a statement which declared the waiver would be used
in good faith and would be undermined if diversion of the products to
other markets occurred.

In a footnote to the 2003 decision, the following countries agreed to
opt out of using the system as importers: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland,
Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the
United States. Also opting out with their accession to the European
Union were: Czech Republic, Cyprus, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovak Republic and Slovenia.

A number of these countries have implemented this opt-out in their
national legislation and others are in the process. On 25 October,
Canada circulated a communication at the TRIPS Council describing its
implementation in a way that might be interpreted to offer a way
around the opt-out.

Consumers International argues that the countries opting out may have
put their public at risk of not being able to obtain affordable drugs
or drug components to fend off a pandemic because it would be
impossible to acquire sufficient amounts without importing drugs made
under compulsory license. They call for a reconsideration of the opt-
out clause.

One delegate to this week=92s TRIPS Council meeting suggested in an
interview that many of these countries, such as the United States,
could issue their own compulsory license and produce the drugs for
domestic use since the opt-out is aimed at importing and exporting.
But this assumes all countries that agreed to the opt-out have
domestic manufacturing capabilities, could obtain all the inputs to
making the drugs, and that their domestic producers would comply.

Also, at least in the immediate case of Tamiflu, the best-known
medicine to fight avian influenza, the drugs could potentially be
imported from India and Israel. Tamiflu does not yet have a patent in
either country so may not need a compulsory license to be produced.
Both countries have significant generic drug manufacturers.

Chairman=92s Statement Proves Divisive

In the chairman=92s statement, 11 other WTO members were mentioned as
having agreed that they would only use the system as importers in
=93situations of national emergency or other circumstances of extreme
urgency.=94 They are: Hong Kong, Israel, Korea, Kuwait, Macao, Mexico,
Qatar, Singapore, Taiwan, Turkey, and the United Arab Emirates. Some
of these countries are concerned that having been grouped together as
wealthier developing countries there might be a precedent for
politically grouping them elsewhere in the WTO.

The discussion of the chairman=92s statement has been fairly divisive,
with members falling roughly into three camps, delegations say. The
African group proposal, the only formal proposal under discussion,
does not carry the issue forward from 2003. Argentina, Brazil, India
favour this approach, with no revival of the chairman=92s statement.

Some of these governments noted this week that agreement on the TRIPS
and public health issue is not required by the December WTO
ministerial in Hong Kong, and said that no solution is better than a
bad one.

The European Commission =93non-paper,=94 which has not been formally
offered nor modified but is widely discussed, is interpreted by many
as recommending the chairman=92s statement be read out again when the
waiver is made permanent. But it calls for the =93legal relationship=94
between the 2003 and the chairman=92s statement to be carried forward.
The European proposal also differs by suggesting the whole waiver
subject be placed in an annex to the TRIPS with only a mention added
to the core treaty text.

The US view, according to sources, is that a stronger, written
version of the chairman=92s text should be included in the permanent
waiver. Switzerland and Japan also support this view, according to
sources.

The third view is similar to that of the United States but is
considered softer. Countries such as Canada, apparently joined by
Australia and others, do not want another reading of the chairman=92s
text, but are more open to how it gets carried forward, whether it is
an asterisk, footnote or other means. This group may fear that
another reading might lead to slippage of some of the 11 developing
countries that were pressured into agreeing in 2003 not to use the
waiver except in extreme circumstances.

But a delegate from one of the 11 nations told Intellectual Property
Watch =93there is no danger of any of the 11 countries falling off,=94
though the delegate said there are concerns among those countries
that their agreement in 2003 not be enshrined in the TRIPS agreement
text. They agreed to make their individual statements and be
mentioned in the chairman=92s statement in 2003 in a =93good faith=94
effort to reach agreement on the waiver. Now some are afraid it will
be made legally binding within the TRIPS text. Singapore, South Korea
and Taiwan are said to be in this category.

=93The voluntary undertakings made by some members in good faith should
also not be turned into binding obligations via incorporation into
the TRIPS agreement,=94 the delegation of Singapore told the meeting.
Singapore said it favours the EU proposal because it retains the
existing arrangement without placing it in the TRIPS text.

Dangerous Political Precedent For 11 Nations?

Perhaps more troubling to the 11 countries is that their agreement
not to use the waiver as a group may now be seen as a precedent for
politically grouping them together in other WTO negotiations.

A delegate from one of the 11 nations said in the past few weeks, the
United States in the WTO Services Council referred to the group and
the chairman=92s text in arguing that the group should accept stronger
liberalisation of their services markets. This could not be confirmed
with the US delegation by press time.

This work is licensed under a Creative Commons License. All of the
news articles and features on Intellectual Property Watch are also
subject to a Creative Commons License which makes them available for
widescale, free, non-commercial reproduction and translation.

William New, the author of this post, may be reached at wnew@ip-
watch.ch.


---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040