[Ip-health] WHO: Counterfeit taskforce may block legitimate access to generics

[Sangeeta Shashikant]

WHO: Counterfeit taskforce may block legitimate access to generics
Published in SUNS #6623 dated 22 January 2009

WHO: Counterfeit taskforce may block legitimate access to generics

Geneva, 21 Jan (Sangeeta Shashikant) -- An anti-counterfeit taskforce
set up under WHO could be used by multinational drug companies to
place obstacles to the trade in generic drugs in developing countries,
thus affecting access to medicines.

This potential problem is expected to be a source of contention when
the WHO Executive Board (EB) meeting, which started on Monday,
discusses this issue later this week.

The discussion will take place in an agenda item related to the WHO
Secretariat's report and draft resolution on "Counterfeit Medical
Products" (contained in EB 124/14).

The documents present counterfeit as a severe health problem and as an
issue that is distinct from intellectual property right issues;
endorses the establishment of International Medical Products
Anti-Counterfeit Taskforce (IMPACT) and indirectly its activities; and
encourages member states to adopt national legislation and regulations
to combat counterfeit medical products presumably on the basis of
documents issued by IMPACT.

It also provides freedom to the WHO to link up with any
institution/entity on this issue, including outsourcing technical
assistance, notwithstanding the special interests that entity might
have. It further empowers IMPACT by leaving implementation of the
resolution to IMPACT as well as allowing IMPACT to make
recommendations to WHO member states.

Ahead of discussions on the agenda item, several African country
delegates participating in the EB meetings have privately pointed out
that in using the term "counterfeit", they intend to protect against
medicines with no or wrong active ingredients (spurious medicines) and
medicines of low quality (substandard medicines) and that their
intention on this issue is not to protect or enforce IP rights.

Other delegations and experts have however pointed out that the term
"counterfeit" is a term used in connection with IP rights,
particularly trademarks infringements. They add that it is perplexing
that WHO is stressing on "counterfeits", instead of directly
addressing health concerns such as spurious and substandard medicines.

These delegations are also concerned that health is being used as a
front through the use of the term "counterfeit" to facilitate and
expedite the IP enforcement agenda.

Delegations have also privately confided their concerns about the use
of the IMPACT as a vehicle to push forward the IP enforcement agenda
and to put in place measures to squeeze out the generic industry, in
an attempt by drug multinationals to retain market competitiveness in
the pharmaceutical sector.

These concerns have been heightened with the issuance of a corrigendum
EB 124/14 Corr. 1 by the WHO. The initial draft resolution states, in
the preamble, "Recognizing that disputes about, or violation of,
intellectual property rights are not to be confused with
counterfeiting". The corrigendum corrects this to "Recognizing that
disputes about, or violations of, patents are not to be confused with
counterfeiting".

The effect of the Corr. is to ensure that other IP violations
particularly trademark violations are covered by the counterfeit
definition put forward in the Secretariat's report.

[Specific concerns with regard to the use of the term "counterfeit"
have been reported in SUNS #6618 dated 15 January 2009.]

There are also many questions surrounding IMPACT, in relation to its
role in IP enforcement and creating barriers that would undermine the
development of generic manufacturers of developing countries.

The origins of IMPACT can be traced to a concept paper "Combating
Counterfeit Drugs: A Concept Paper for Effective International
Cooperation" drafted by Michele Forzley, a US-based lawyer and a
representative to a US Commerce Department Advisory Committee on
Intellectual Property.

This paper was based on another 2003 study "Counterfeit Goods and
Public's Health and Safety", supported by the US Patent and Trademark
Office (USPTO) and whose copyright is owned by the International
Intellectual Property Institute (IIPI), an industry think-tank. It
focussed on promotion and enforcement of IPRs.

The 2003 study states that the goal "is to begin the process of
shifting the policy perspective on counterfeit goods to an
understanding that counterfeits are not only an intellectual property
legal problem, but also a very real public health problem". It added
that "To re-frame the policy perspective is fundamental to the success
of any strategy on counterfeit goods".

The paper remarks "what havoc counterfeits might wreck... if resources
devoted to intellectual property seizures are redirected towards other
objectives", and that "often in the developing/ underdeveloped world
public health surveillance is inadequate or non-existent, particularly
in those with no developed intellectual property legal system."

IMPACT was launched in 2006 following a conference organised in Rome
by the WHO. It was supported by the International Federation of
Pharmaceutical Manufacturers Association (IFPMA, an association of
multinational companies) resulting in the Rome Declaration.

The Chair of the taskforce when it was initially launched was Dr.
Howard Zucker, at that time a WHO Assistant Director-General of Health
Technology and Pharmaceutical division. He has been criticised by
health NGOs and even within the WHO secretariat for slowing down WHO's
work on access to medicines, particularly where it relates to the use
of TRIPS flexibilities.

Objectives outlined in the Rome Declaration include promoting
coordination among different anti-counterfeiting initiatives and
raising awareness of the need for legislative measures at national
level. The long-term aim of IMPACT is to "explore further mechanisms,
including an international convention, for strengthening international
action against counterfeit medicines".

IMPACT: Issues of Participation & Transparency -- There is concern
over the influence that multinational drug companies exert over
IMPACT, particularly in norm-setting. IFPMA plays a central role in
the activities of IMPACT as its Director General (presently Alicia
Greenidge) heads the Working Group on Technology. The MNCs also
participate in IMPACT through Pharmaceutical Security Institute (PSI),
which was established by 14 pharmaceutical MNCs to work on counterfeit
drugs.

This direct participation of the private sector in a WHO initiative
raises serious issues of conflict of interests and whether there has
been compliance with the WHO Guidelines on Working with the Private
Sector to Achieve Health Outcomes.

Also, the ad-hoc participation of selected WHO member states in IMPACT
raises questions as to the extent of participation of WHO member
states and the basis on which member states are selected to
participate in IMPACT's activities. Another transparency concern is
that IMPACT has been operating outside the purview of WHO member
states.

IMPACT & Norm-Setting -- IMPACT's 2007 General Meeting endorsed a text
on "Principles and Elements for National Legislation against
Counterfeit Medical Products" ("2007 Model Elements"), which contains
the WHO and IMPACT logos. This text covers scope; definitions;
obligations of governmental institutions, manufacturers, operators of
the distribution chain, retailers and other operators; what amounts to
an illegal act; sanctions; and nature of sanctions.

A December 2008 General Meeting of IMPACT in Tunisia revised the text
to also include medical devices. More than half the participants
(mentioned in the participants' list) were from organizations with a
strong interest in IP protection and enforcement.

The Model Elements are meant to serve as a "reference for developing
ad hoc legislation aimed at effectively combating counterfeit medical
products within their jurisdiction". In fact, it clearly recognises
that "Specific national and/or regional bodies of criminal,
pharmaceutical, administrative, intellectual property and civil
legislation may need to be established or enhanced on the basis of the
principles described in this document..."

It is also noteworthy that the Model Elements for national legislation
does not explicitly recognise the use of parallel importation and
other TRIPS flexibilities. The Model Elements contains a wish list of
obligations that governmental institutions, manufacturers, operators
of the distribution chain, retailers and other operators should
undertake. It lists more than 28 responsibilities for the government,
9 responsibilities for the manufacturers, 8 responsibilities for the
retailers and 5 responsibilities of other operators.

The responsibilities are lopsided and place a heavy burden on the
governments. Many of the obligations mentioned are the subject of much
debate and dispute in the other fora such as the World Customs
Organisation and Anti-Counterfeiting Trade Agreement (ACTA), an
initiative on IP enforcement launched by developed countries.

IFPMA, being the Chair of Working Group on Technology, plays a central
role in the overall standard-setting functions of IMPACT (since Chairs
of Working Groups are also members of the Planning Group of IMPACT),
with a mandate to assess technologies to prevent, deter, or help to
detect counterfeit products and disseminate information and
recommendations on the merits and limitations of technologies. Thus,
it is the pharmaceutical industry that will determine the level and
types of technology to be used for anti-counterfeit purpose.

For this purpose as well, Glaxo Smith Kline has prepared a paper on
"Anti-Counterfeiting Technologies for the Protection of Medicines" and
this paper contains the logos of WHO as well as of IMPACT.
Interestingly, the paper states "some of these [technologies] are
protected by international patents and may only be available from
licensed suppliers, subject to appropriate royalties or license fees".

The Terms of Reference of IMPACT clearly states that all IMPACT's
documents and other outputs will be issued by WHO and will be
disseminated with appropriate disclaimers, including that the content
does not necessarily reflect the views or state policy of the
participating organisations, agencies and institutions
(including WHO).

However, IMPACT documents available on websites (e. g. the 2007 Model
elements) do not contain this disclaimer, although the WHO logo is
visible on IMPACT documents. There is thus a concern that there is a
presumption that IMPACT's documents reflect the position of the WHO
Secretariat and its member states.

IMPACT and Barriers to Trade -- Many obligations in the 2007 Model
elements could create non-tariff barriers (NTB) for trade in medical
products and become possible entry barriers for the generic industries
particularly in developing countries.

Some of these elements include: (a) to regulate the manufacture,
importation, exportation, distribution, supply, donation, and sale of
medical products, thereby ensuring that those who perform any
transaction have specific license or are authorised to do so; and (b)
to establish regulations for a distribution system including measurers
for traceability of medical products throughout the distribution
channels.

Other elements are to establish import procedures (including
designating a limited number of entry points for imported medical
products); to regulate manufacture of active substances and of certain
experiments that may pose public health risks; to regulate
international trade of labels and packaging materials for medical
products; to ensure that suppliers of raw, starting and packaging
materials are legitimate and finished medical products are delivered
to legitimate operators of the distribution chain, including verifying
the legitimacy of business partners; and to document the origin of all
materials used in the manufacture of authorised products.

Several of the above can be considered non-tariff barriers for trade
in medical products. Besides this, the measures raise other concerns.

The measures may affect TRIPS flexibilities such as parallel
importation of good quality medicines, which is recognised by the WTO
members as a measure to promote access to more affordable medicines.
Regulations such as mentioned in paragraph (b) may push parallel
traders out of the system, resulting in budgetary consequences for
developing countries.

Similar regulations have been proposed in the EU. The pharmaceutical
industry is calling for an EU-wide identification system to track and
trace medicines to the production site. Parallel distributors are
opposed to such measures; also pointing out that there is no evidence
that parallel trade is an entry point for counterfeit medicines.

The abovementioned measures may also undermine access to medicines as
well as nascent generic pharmaceutical industries.

For example, the Model Elements makes it illegal to "manufacture,
transport or distribute any equipment, materials, components
(including genuine ones) or documentation used in the production or to
accompany the distribution of counterfeit medical products with the
knowledge or intent that they be used for such purposes". Thus, such a
measure would impose liability on manufacturers of active
pharmaceutical ingredients (APIs), if those APIs are used to make
counterfeits.

Such a measure places a major burden on the API maker as it would have
to verify the validity of the manufacturers to whom they sell and to
ensure that all use is legitimate.

The measures also impose liabilities on the transport companies, the
makers of labels and all other entities that are directly or
indirectly related to the manufacture, transport and distribution of
the so-called counterfeits.

Ultimately, such measures would result in entities refusing to deal or
trade with generic manufacturers and would thus undermine generic
industries in developing countries and undermine access to medicines.

Generic drug industries in developing countries are already adversely
affected by the TRIPS Agreement. Any additional standards required
with regard to import and export including adoption of technology
standards would further hamper the attempts of many developing
countries to develop their pharmaceutical manufacturing capacity.

IMPACT & IP Enforcement Agenda -- Compounding the problems of lack of
participation and transparency is the fact that intergovernmental
organisations and the industry associations that IMPACT is linked with
are engaged in an aggressive IP protection and enforcement agenda
including establishing TRIPS-plus standards. These organisations
include the INTERPOL, WCO, WIPO, European Commission, IFPMA, and PSI.

In fact, IMPACT's meetings such as Conference on Developing Effective
Legislation to Combat Counterfeit Medical Products (10-12 December
2007) and Meeting of Jurists and Experts on Legislation to Combat
Counterfeit Medical Products (12-13 July 2007) are listed as "WIPO's
enforcement-related training and awareness-raising activities and
cooperation with intergovernmental and non-governmental
organisations".

The G8 countries also identify IMPACT as part of their IP enforcement
agenda and in this regard would like to strengthen cooperation with
WHO.

Susan Sell of George Washington University in a paper identifies
INTERPOL, WCO, WIPO and IMPACT with the IP Anti-counterfeiting and
enforcement agenda which "involves hundreds of OECD-based global
business firms and their foreign subsidiaries."

IMPACT & Technical Assistance -- Endorsement of IMPACT in the
Secretariat's report and in the draft resolution would set a
significant precedent in the WHO in that norms set essentially by the
private sector will then become the basis for technical support at the
national level.

There is evidence that some developed country members have such
intentions. A recent European Commission paper on "Safe, Innovative
and Accessible Medicines: A Renewed Vision for the Pharmaceutical
Sector" states its intention of using IMPACT to develop and enforce
legislation against third countries. The same paper describes how the
EU is losing market share in the pharmaceutical industry to emerging
market economies. The EC is a key funder of IMPACT.

The report estimates that $20 million will be needed for supporting
activities at regional and country levels and $10 million for global
coordination, policy guidance and the IMPACT secretariat's costs.

Establishing and enforcing national legislation particularly in
developing countries through any agency (notwithstanding their vested
interest) that is able to provide funding is a key aim of the draft
resolution in EB 124/14.

However, many developing countries privately have raised concerns that
the authority to deal with quality and safety issues for medicines is
being taken away from drug regulatory authorities and being placed in
the hands of law enforcements agencies which have little idea about
such issues. +