[Ip-health] RE: [HEALTHGAP] EC Mandelson's "answer" on compulsory licensing

[Sean Flynn]

This part of Mandelson's answer seems worth engaging:=0D
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"The use of compulsory licensing should not become a standard way of=0D
doing business, because systematic recourse to compulsory licensing=0D
would eventually be detrimental to the patent system, and so to=0D
innovation and the development of new medicines."=0D
=0D
Aidan Hollis, Mike Palmedo and I are working on a paper that will make the =
exact opposite point in economic terms -- one that has been made by treatme=
nt activists for many years in social justice terms.  Here is a draft abstr=
act from that article, still under works:=0D
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"This paper explains an economic rationale for compulsory licensing of need=
ed medicines in developing countries. The patent system is based on a trade=
-off between the =E2=80=9Cdeadweight losses=E2=80=9D caused by market power=
 and the incentive to innovate created by profits. However, markets for ess=
ential medicines under patents in developing countries are characterized by=
 highly convex demand curves, producing large deadweight losses relative to=
 potential profits when monopoly firms exercise profit-maximizing pricing s=
trategies.  As a result, these markets are systematically ill-suited to exc=
lusive marketing rights, a problem which can be corrected through compulsor=
y licensing.  Open licenses under many licenses of right or essential facil=
ity legal standards are well suited toward correcting the worst effects of =
exclusive patent rights without compromising the goal of providing a just l=
evel of compensation for the innovative acts of the originating firm."=0D
=0D
In other words, we couldn't disagree with Mandelson's statement more.  Comp=
ulsory licensing -- with open licenses that do not require individual negot=
iations for every new entrant -- SHOULD become a standard way of doing busi=
ness with patented essential medicines in developing countries.  The reason=
 is that most developing countries have extreme income inequality that prod=
uces perverse incentives to price to the top 5% or so of the population und=
er an exclusive right regime.  This is the profit maximizing behavior in a =
highly unequal country.  It was likely economically rational to price AIDS =
drugs at $10,000 a year in poor countries.  And this problem is not isolate=
d -- it is systematic, and therefore needs a systematic response.=0D
=0D
-Sean Flynn=0D
Assoc. Director, Program on Information Justice and Intellectual Property=
=0D
AU Washington College of Law=0D
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-----Original Message-----=0D
From: Healthgap List [mailto:HEALTHGAP@LISTSERV.CRITPATH.ORG] On Behalf Of =
J=C3=A9r=C3=B4me Martin=0D
Sent: Wednesday, September 05, 2007 3:33 PM=0D
To: HEALTHGAP@LISTSERV.CRITPATH.ORG=0D
Subject: [HEALTHGAP] EC Mandelson's "answer" on compulsory licensing=0D
=0D
Hello=0D
=0D
Two weeks ago, Aides and Act Up-Paris wrote to European Comisioner=0D
Mandelson about his letter to the thai governement :=0D
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http://www.actupparis.org/article3126.html=0D
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Please find below his "answer". Well, no answer at all on Thailand. You=0D
will note the last sentence of the letter : EC Mandelson knows better=0D
than the governments of the developing countries what's good for them.=0D
=0D
Best=0D
=0D
J=C3=A9r=C3=B4me Martin / Miss Heat Stable=0D
Act Up-Paris=0D
=0D
-----------------------------------------------------------=0D
Brussels, 3 September 2007=0D
CAB24/PM/PTH/raa/D(07)1076=0D
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Act Up-Paris =09AIDES=0D
Mr Emmanuel Ch=C3=A2teau=09Mr Bruno Spire=0D
Mr Hugues Fischer=09Pr=C3=A9sident=0D
Co-Pr=C3=A9sidents=0D
Mr J=C3=A9r=C3=B4me Martin=0D
Commission Internationale=0D
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Thank you for your letter dated of 22 August about access to medicines=0D
and compulsory licensing of pharmaceutical patents.=0D
First of all, I would like to underline that the Commission remains=0D
supportive of the Doha Declaration on the TRIPS Agreement and Public=0D
Health (which it had promoted), and fully recognises the right of WTO=0D
members to grant compulsory licenses.=0D
The Commission has been very active on patent issues in relation to=0D
pharmaceutical products, including promoting an amendment to the TRIPS=0D
Agreement to allow compulsory licensing for export of medicines towards=0D
least-developed and developing countries. This amendment is pending=0D
approval by the European Parliament. We have also made clear that we=0D
fully respect the right of least-developed countries not to implement=0D
the provisions of the TRIPS Agreement for pharmaceutical patents until 1=0D
January 2016.=0D
The use of compulsory licensing is an exception to the rights conferred=0D
by a patent which should be used in the spirit of the 2001 Doha=0D
Declaration and in the respect of the conditions of the TRIPS Agreement.=0D
The use of compulsory licensing should not become a standard way of=0D
doing business, because systematic recourse to compulsory licensing=0D
would eventually be detrimental to the patent system, and so to=0D
innovation and the development of new medicines. That is why the EU has=0D
always made clear its preference for voluntary agreements between=0D
potential licensees and patent holders on reasonable terms and=0D
conditions, which the provisions of the TRIPS amendment can help facilitate=
.=0D
It should also be borne in mind that the problem of increased access to=0D
medicines, especially in poorest countries, needs to be addressed by a=0D
wider package of national and international actions. The compulsory=0D
licensing represents only one of the elements available for that matter.=0D
The Commission supports, through technical assistance, the development=0D
of the generic drugs industry in poor developing countries. Prevention,=0D
treatment and care of HIV/AIDS, malaria and tuberculosis are one of the=0D
objectives of a specific initiative dedicated to aid for poverty-related=0D
diseases in developing countries for a combined 2005-2006 total of =E2=82=
=AC=0D
81.2m. Specific projects have also been funded in Africa and Asia.=0D
The EU is also a major sponsor of pharmaceutical and=0D
health-oriented/clinical research including health systems research and=0D
capacity building in various sub-Saharan African countries through the=0D
European & Developing Countries Clinical Trials Partnership (EDCTP).=0D
During the period of implementation of the sixth Framework Programme for=0D
Research (FP6 - 1999-2002), the Commission's support for R&D devoted to=0D
poverty-related diseases amounted to more than =E2=82=AC 455m. For the same=
=0D
period, an additional =E2=82=AC 78m were spent by the International Scienti=
fic=0D
Cooperation (INCO) on various projects covering the fields of neglected=0D
infectious diseases, health systems/policy research and reproductive=0D
health. The Commission is fully committed to the success of these=0D
research projects and innovative initiatives and will continue to do so=0D
under the current seventh Framework Programme for Research (FP7 -=0D
2007-2013).=0D
In the Economic Partnership Agreements with ACP countries and in other=0D
future bilateral and regional agreements with developing countries, the=0D
Commission is not asking, and will not ask, for provisions which could=0D
affect access to drugs or undermine the TRIPS flexibilities contained in=0D
the Doha Declaration on the TRIPS Agreement and Public Health.=0D
It is also important to strike a balance between the need to provide=0D
incentives for innovation and research and development and the need to=0D
make existing drugs as available as possible at affordable prices, in=0D
particular, in poor developing countries. It is well established that=0D
patent protection provides incentives for innovation, transfer and=0D
dissemination of technology and research and development into new drugs.=0D
It is in the interest of developing countries themselves to adopt=0D
appropriate patent protection in order to attract investment and develop=0D
their own production capacities.=0D
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=0D
Peter Mandelson=0D
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=3D=3D=3D=3D=3D=3D=0D
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