[Ip-health] Manila Times: Draft law affirms patent rights of drug firms

[Thiru Balasubramaniam]

http://www.manilatimes.net/national/2008/may/12/yehey/top_stories/20080512t=
op4.html

Monday, May 12, 2008


No cure for costly medicines?

Draft law affirms patent rights of drug firms

By Alecks P. Pabico, Philippine Center for Investigative Journalism

IT WON'T be over even after the lady signs. And even after she signs
it, the fight for popular access to affordable medicines won't be over.

All that the cheaper medicines bill needs to be enacted into law is
the signature of President Gloria Arroyo. But some legal experts
lament that as enrolled, the bill passed by Congress bears
"imperfections" that effectively affirm the patent rights of big
pharmaceutical companies over public health, a major hurdle to
bringing down drug prices.

And while the bill introduced amendments to the Philippines'
intellectual property law, the weak and flabby wording of some
provisions could challenge implementation, and keep the promise of
cheaper drugs locked in litigation.

Lawyer Elpidio Peria, for one, says that as soon as Arroyo signs the
bill into law, the battle shifts to the drafting of its specific
implementing rules and regulations or IRR. And that, he says, should
teach public-health advocates to study intellectual property issues in
the pharmaceutical sector more judiciously.

Peria, an associate of the Third World Network (TWN), one of the
nongovernmental organizations that had supported the Senate version of
the bill, says that the drafting of the law offers one lesson: It is
"dangerous" to leave the debate on intractable intellectual property
issues to lawyers and policymakers alone.

"The (bicameral) debates only proved the esoteric nature of
intellectual property, which makes it dangerous to be left to lawyers
and policymakers," says Peria. "The (Intellectual Property) Code
amendments will now have to be scrutinized closely so that its
imperfections might be augmented by the IRR."

"The (Intellectual Property) Code amendments will now have to be
scrutinized closely so that its imperfections might be augmented by
the IRR," Peria says.

Throughout the debate, public-health advocates and legal experts had
welcomed the inclusion of amendments to the country's intellectual
property law in the final bicameral draft of the affordable medicines
bill.

Undersecretary Alexander Padilla of the Department of Health (DoH)
himself says that while the bill lost some of the provisions his
department had championed, what is important now is that the law would
contain "the more important patent flexibilities."

The global nonprofit organization Oxfam International also says that,
if applied by the government, the IP amendments "should help ensure
that patent privileges of drug companies do not get in the way of
promoting and protecting public health through affordable medicines."

Yet the likes of Peria worry that the "simplistic debates" on price
regulation and the Generics Act amendments had obscured the bill's IP
provisions. As a result, Peria notes, the IP amendments were not fine-
tuned and rid of their inherent weaknesses.

Some legal experts now fear that despite its promise of affordable
medicines, the law would face difficulties in its implementation, in
large part because pharmaceutical companies could take advantage of
the loopholes in the patent-related amendments.

Scuffles over 'generics-only'

Up until the bill's ratification by Congress in late April, the
bicameral debates had focused mostly on the provision of House Bill
2844 that said only the generic names of medicines would appear on
medical, dental, and veterinary prescriptions. This raised a howl
among doctors who even threatened to declare a "hospital holiday" if
the stipulation - which was among those being pushed by the health
department - was not removed.

Later, the legislators wrestled over the House of Representatives's
proposal to create a drug price regulatory board. This further delayed
the passage of the bill, which had been certified as urgent by the
Arroyo administration way back in 2001.

In the end, the "generics-only" provision was dropped and the price-
regulation board was replaced with a price monitoring and control
mechanism that places the sole authority to impose price ceilings on
the President, upon recommendation of the health secretary.

There were loud grumbles about a "watered-down" bill, but many also
took comfort in the retention of several key provisions, including
those on intellectual property.

"I would have been happier with the inclusion of the generics-only
provision," says Akbayan party-list Rep. Ana Theresia Hontiveros-
Baraquel. But she is nonetheless pleased that the IP Code amendments,
which were the intent of the original bill she filed in the House,
were adopted.

Ireneo Galicia, former deputy director general of the Intellectual
Property Office (IPO), also says he can live with the changes in the
price control and generics provisions knowing how "politically"
sensitive these issues are, as long as his main advocacy, the IP
amendments on patent reforms, are intact.

"No doubt," he says, "these will help immediately bring about the
lowering of prices of patented medicines via the parallel importation
provision, and in the long term via the early working and new use
provisions."

Drug patent provisions

For sure, the IP provisions included in the final draft of the
bicameral bill are formidable. These include:

o adopting the principle of international exhaustion of intellectual
property rights (IPR) for drugs and medicines to improve access to
cheaply priced drugs anywhere in the world without risk of patent
infringement;

o narrowing the definition of what medicines can be patented by
disallowing the practice of evergreening =AF patent coverage for "new
uses" of existing, already patented substances;

o providing for a broad parallel importation provision to allow the
government to procure quality, affordable patented drugs and medicines
from other countries;

o providing additional means to issue compulsory licenses so that the
government can easily set aside patent restrictions in response to
public health threats; and

o adopting an "early working" or Bolar provision, which ensures that
affordable versions of patented medicines can be introduced into the
Philippines market immediately upon patent expiration.

The bicameral version also adopted Section 93-A that was introduced in
the House bill, which provides an alternative procedure for the
issuance of a special compulsory license under the framework of the
Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

The IPO itself has declared that these amendments are a legitimate
exercise of the flexibilities accorded to developing countries like
the Philippines in the Doha Declaration on the TRIPS and Public Health.

The World Trade Organization (WTO) had adopted the TRIPS Agreement in
November 2001. More than six years later, however, such flexibilities
have yet to be incorporated in Philippine intellectual property law
that would have made it more responsive to the problem of inaccessible
medicines and expensive drug prices.

Hole-ridden amendments?

Lawyer Peria says he is happy that the IP amendments made it to the
final draft of the bill. But he echoes other experts in pointing out
some of these are likely to face challenges from pharmaceutical
companies in court. Congress should have strengthened these so they
could withstand such challenges, he says.

In fact, from the outset, multinational drug companies, particularly
those represented by the Pharmaceutical and Healthcare Association of
the Philippines (PHAP), had opposed the proposed amendments to the
intellectual property law. As the drug companies see it, these would
weaken the country's patent system.

In PHAP's 27-page position paper submitted to Congress during
deliberations on the bill, 17 pages were devoted to the changes in the
IP Code, arguing that these are discriminatory and violative of the
due process and equal protection clauses of the Constitution. It also
said that these were inconsistent with the country's international
treaty obligations of the Philippines.

These days, Peria's organization, TWN, has made known its concerns
over the final draft's Section 72, which is on the international
exhaustion of patent rights. Peria says this provision was weakened
when the bicameral panel opted to retain the national exhaustion
principle by inserting the phrase "in the Philippines." He says this
provides patent owners with additional ammunition for litigation as
they can argue that the national exhaustion rule still applies in
specific circumstances when there is a patent existing in the
Philippines for the drug in question.

Section 72.4 on the "early working" or Bolar provision adopted from
the House bill, meanwhile, is also weak since it copied the data
protection provisions of Article 39.3 of the TRIPS Agreement without
its key provisos, says Peria.

These provisos, he explains, stipulate that data protection applies
only to new chemical entities and that it should involve data
generated through a considerable effort and investment. Without these,
the section practically imposes higher levels of intellectual property
protection - also known as TRIPS-plus rules - that tend to undermine
or weaken the public-health safeguards allowed under TRIPS.

The same is true of Section 74 in regard to government's use of an
invention, says Peria, as it qualifies the public non-commercial use
of the patent by the government with the phrase "without satisfactory
reason." This, the lawyer says, is an additional requirement that is
not found in the TRIPS Agreement.

And while Peria says that a stipulation allowing government use in
case demand for the patented medicines is not met is good, it could be
subjected to litigation by the patent-holder because of the phrase "to
an adequate extent and on reasonable terms."

Tripping on TRIPS

Another problematic amendment is Section 93-A regarding the grant of a
"special" compulsory license. The provision, he says,
"operationalizes" Paragraph 6 of the Doha Declaration on TRIPS and
Public Health that calls for making effective use of compulsory
licensing by countries with insufficient or no drug manufacturing
capacity.

Peria says that legislators may not have realized the international
implication of their action when they "unwittingly" grafted to this
section Article 31 bis. He says this is an amendment to the TRIPS
Agreement that was meant as a "permanent solution" to the issues
raised in relation to Paragraph 6 of the Doha Declaration.

In an August 30, 2003 decision, the WTO General Council proposed a
"temporary solution" by waiving the limitation that compulsory
licenses should be predominantly for the supply of the domestic
market. But patent experts and public-interest health groups
criticized the decision, noting that it also imposed several
conditions and procedures for generics exporters and importers that
were largely seen as hindering access to medicines.

Essentially, what Article 31 bis does is to remove this limitation on
the grant of compulsory licenses. But Peria says that by calling it
"special," Section 93-A is a "misapprehension" of Paragraph 6 of the
Doha Declaration.

"(Paragraph 6) doesn't refer to the license, but to the process that
may be undergone by a country that accepts the Article 31 bis
amendment to the TRIPS Agreement," he explains. "What does that make
of the other compulsory licenses in the other provisions of the IP
Code? Is there basis for that distinction? Without any basis, the
provision can be easily questioned in court."

Besides, the amendment has yet to come into force, with less than two-
thirds of WTO member-nations ratifying it.

Other potentially litigious amendments, says TWN, are the anti-
evergreening provisions found in Sections 22 (on Non-Patentable
Inventions from HB 2844) and 26 (on Inventive Step from SB 1658).
Patterned after amendments in the India Patents Law, both sections
exclude from patent protection "new uses" of a previously patented
product or process. This addresses the phenomenon of "evergreening,"
which consists of the patenting of minor changes to existing products
(e.g., formulations, dosage forms, polymorphs, salts, etc.) thereby
artificially extending the protection conferred by the original patent
over a drug.

Peria says that what legislators might have thought of as double
protection against the proliferation of frivolous patents on just
about any demonstrable "new use" could be construed as a case of
double standards. PHAP, which has insisted that the current IP Code
has sufficient safeguards against double patenting and evergreening,
may well question these provisions for making it doubly difficult for
drug firms to comply, he says.

A veiled U.S. warning?

Heightening worries of public-health advocates regarding the IP
amendments is the release last month - just as the bicameral debates
on the bill were winding up - of the annual IP report of the U.S.
Trade Representative (USTR).

The report highlights, among others, the need for proper
implementation of the TRIPS Agreement by developed and developing
country-members of the WTO. According to the United States, it will
consider all options, including (but not limited to) initiation of
dispute settlement consultations in cases where countries do not
appear to have implemented fully their obligations under the agreement.

Yet while the Philippines is on its Watch List, the USTR's concern is
more on the apparent increase in piracy cases, particularly concerning
books, as well as illegal downloads using mobile devices and the
Internet, and illegal camcording of films in cinemas.

Still, the report's comments on Thailand, which remains on the USTR's
Priority Watch List, could be a veiled warning to the Philippines.
After all, the report cites the "overall deterioration" in Thailand of
IP rights protection, which includes the use of compulsory licenses to
produce cheaper versions of patented medicines.

The USTR has urged Thailand to respect the viability of the existing
patent system. It sides with the developed-nation pharmaceutical
industry that has expressed concern that "the use of such licenses in
mid-size economies such as Thailand could inflict economic harm on the
industry and its ability to carry out research and development."

The Office of the U.S. Trade Representative was suspected of
attempting to modify some of the provisions in House Bill 2844 during
the deliberations prior to its passage on third and final reading last
year. An unsigned position paper circulated among members of the Lower
House's trade and industry committee was traced to the USTR based on
references in the paper to U.S. "modern free trade agreements."

The paper had called the legislators' attention to the strict
definition of patentability and the provision on the government's use
of compulsory licensing in the House bill. - Philippine Center for
Investigative Journalism.

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


Tel: +41 22 791 6727
Mobile: +41 76 508 0997