[Ip-health] Approach to "counterfeit" drugs may affect access to medicines

[Sangeeta Shashikant]

WHO: Approach to "counterfeit" drugs may affect access to medicines
Published in SUNS #6618 dated 15 January 2009

Geneva, 14 Jan (Sangeeta Shashikant) -- A WHO Secretariat report and
the attached draft resolution (EB 124/14)  prepared for the WHO
Executive Board meeting starting 19 January proposes resolving health
problems through mechanisms related to enforcement of intellectual
property rights (IPRs).

Some experts are concerned that this is a wrong approach as it may end
up negatively affecting the legitimate use of generic drugs and thus
become an obstacle to access to medicines.

The mechanisms include bundling legitimate health concerns under the
rubric of "counterfeit", a term used in connection with IPRs, wherein
the numerous anti-counterfeiting initiatives that have emerged endorse
solutions oriented towards protecting and enforcing the rights of the
IP holders.

Another linked mechanism is the International Medical Products
Anti-Counterfeit Taskforce known as IMPACT.

The Secretariat's report and draft resolution seeks endorsement of WHO
member states for IMPACT and its activities  [This article deals with
the "counterfeit" issue. A separate article will deal with the IMPACT
mechanism.]

There are legitimate health concerns pertaining to quality, safety and
efficacy of medicines as there are problems concerning products with
wrong information on the label with regard to the content, date of
manufacture, place of manufacture, date of expiry (known as false
labelling), products which on the contrary to the label contain no
active ingredient or a wrong active ingredient or an insufficient
amount of active ingredient (known as spurious drugs) and; low-quality
drugs caused by poor manufacturing practices, poor transportation
techniques or poor storage facilities (substandard drugs).

The initial mandate given to WHO through resolution WHA 41.16 on
rational use of drugs in 1988 was for the WHO to initiate programmes
not only on "counterfeit" but also to address problems of "falsely
labelled", "spurious", and "substandard" drugs. However, while the
term "counterfeit" appears to have been given momentum by interests in
the WHO, other concepts have been sidelined.

Thus, the WHO Secretariat's report and attached draft resolution
titled "Counterfeit medical products" may come under scrutiny and
debate at the EB meeting as the stakes involve the continued right of
developing countries to have access to good quality, safe and
affordable generic medicines.

According to experts, the documents before the EB could result in
negative implications for access to medicines and hamper the
development of generic drug industries in developing countries.

The report and draft resolution use a highly politicized terminology
i. e. "counterfeit" and presents this term as a central health
problem, distinct from IP issues. In para 5, the Secretariat's report
states, "Often no distinction is made between patent violations,
patent or trademark disputes, copyright violations and actual
counterfeiting". Para 12 says that the intellectual property rights
approach identifies the rights holder as the main victim of
counterfeiters and as the main trigger of enforcement and prosecution
while, in the case of medical products, the real victim of
counterfeiting is the patient".

The Secretariat's report seems to disregard the numerous international
documents and national laws that use "counterfeit" in connection with
IPRs, particularly trademark violations and the numerous
anti-counterfeiting legislations that are focused on IP protection and
enforcement.

For example, the TRIPS Agreement in the WTO refers to counterfeit in
its preamble i. e. "Recognizing the need for a multilateral framework
of principles, rules and disciplines dealing with international trade
in counterfeit goods" and further refers to counterfeit in the context
of trademark violations about 7 times.

In fact, Article 51 of TRIPS defines the term "counterfeit trademark
goods" as "any goods, including packaging, bearing without
authorization a trademark which is identical to the trademark validly
registered in respect of such goods, or which cannot be distinguished
in its essential aspects from such a trademark, and which thereby
infringes the rights of the owner of the trademark in question under
the law of the country of importation".

A similar definition of counterfeit goods is used in "The EC
Regulation concerning customs action against goods suspected of
infringing certain IPRs and measures to be taken against goods found
to have infringed such rights (Council Regulation (EC) No. 1383/2003)"
as well as in other national legislations.

The US Food Drugs and Cosmetic Act defines a counterfeit drug as "a
drug which, or the containers or labelling of which, without
authorization, bears the trademark, trade name, or other identifying
mark, imprint or device or any likeness thereof, of a drug
manufacturer, processor, packer, or distributor other than the person
or persons who in fact manufactured, processed, packed or distributed
such drug and which thereby falsely purports or is represented to be
product of or to have been packed or distributed by such other drug
manufacturer, processor, packer, or distributor"

Numerous anti-counterfeiting initiatives have recently emerged, for
example, the Anti-Counterfeiting Trade Agreement (ACTA) (a
plurilateral initiative of the European Union, Japan, United States
and Switzerland), World Customs Organisation on "Provisional Standards
Employed by Customs for Uniform Rights Enforcement (SECURE)", G-8
Countries' Initiative on Counterfeits; WIPO's Advisory Committee on
Enforcement (ACE), the Security and Prosperity Partnership (SPP)
(between Canada, Mexico and US); Interpol's initiatives on IP crime
and other initiatives in US as well as in the EU, all geared towards
strong protection and enforcement of IP.

One of the main aims of these initiatives is to export legislation
into developing countries, to get them to take on TRIPS-plus
enforcement. Broadly some of the prescriptions in these
anti-counterfeiting initiatives include:

(1) an extensive legal framework designed to ensure that the
authorities and the right holders have the appropriate tools for
strong IPR enforcement;

(2) shifting the burden of protecting IP rights to governments and
reducing burden on IP holders to protect their rights;

(3) extensive powers to customs authorities to seize import, export
and trans-shipment of goods suspected of infringing IP;

(4) authority to take action against suspected infringers even in the
absence of complaint by right holders;

(5) enhancing penalties including imposing criminal sanctions (in
addition to civil or where applicable administrative liability);

(6) extensive powers to the authorities to seize documentary evidence
relating to the suspected infringement and the suspected goods
themselves and for the granting of preliminary injunctions;

(7) seizure of the alleged infringer's bank accounts and other assets
and profits to ensure payment of damages;

(8) destruction of IPR infringing goods and seizure of equipment and
materials, used to make IPR infringing goods.
The WHO Secretariat deals with and uses the term "counterfeit" in a
confusing manner. Such confusion could be damaging for access to
medicines in a climate where G8 countries in particular the US and the
EU are on a rampage to promote IP protection and enforcement that goes
beyond the TRIPS Agreement through many methods including influencing
programmes in UN and other international agencies.

Legitimate health concerns pertaining to quality, safety and efficacy
of medicines do exist, as noted above. However, when some of such
legitimate health concerns are packaged under the term "counterfeit",
a term used in the context of IP the likely prescription is bound to
be oriented towards protecting and enforcing the rights and interests
of the IP holder to such an extent that it may damage access to
medicines.

A case on point is Kenya's recent anti-counterfeiting legislation
adopted by parliament in 2008 amidst publicity on how the consumer
must be protected against counterfeit medicines. However, the bill has
little to do with protection of consumers or public health and more to
do with protecting the rights and interests of IP holders.

The scope of the bill includes a wide range of IP including plant
breeders' right (under Seeds and Plant Varieties Act), trademarks,
patents and other IP rights protected under the Industrial Property
Act. The bill contains obligations exceeding those that developing
countries are required to fulfil to comply with the TRIPS Agreement,
while making no explicit accommodation for the legal limitations and
exceptions usually found in IP laws.

The Bill defines counterfeiting as "taking the following actions
without the authority of the owner of intellectual property right
subsisting in Kenya or elsewhere in respect of protected goods". This
paragraph applies to actions of (a) manufacture, production,
packaging, re-packaging, labelling or making, whether in Kenya or
elsewhere of any goods whereby those protected goods are imitated in
such manner and to such a degree that those other goods are identical
or substantially similar copies of the protected goods, (b)
manufacture, production or making, whether in Kenya or elsewhere, the
subject matter of that intellectual property, or a colourable
imitation thereof so that the other goods are calculated to be
confused with or to be taken as being protected goods of the said
owner or any goods manufacturer, produced or made under his licence; (
c) the manufacturing, producing or making copies, in Kenya or
elsewhere, in violation of an author's rights or related rights.

The effect of such legislation is the protection of an IP right even
when it does not subsist in Kenya. Thus, IP rights related to a
product patented in another country but not in Kenya would still be
enforced in Kenya.

In view of the detrimental effects of such legislation, NGOs working
on access to medicines in Kenya battled to include a provision to
limit damage to access to medicines and damage to the use of
flexibilities (such as parallel importation and compulsory license)
that are contained in the Kenyan Industrial Property Act. Thus, the
final Bill includes an additional paragraph on medicines "in relation
to medicine, the deliberate and fraudulent mis-labelling of medicine
with respect to identify or source, whether or not such products have
correct ingredients, wrong ingredients, have sufficient active
ingredients or have fake packaging: Provided that nothing in this
paragraph shall derogate from the existing provisions under the
Industrial Property Act".

This definition is from a definition worked out in 1992 in a workshop
organised by WHO and IFPMA. There are problems with this definition;
for example, the terms "identity" and "source" are not explained. In
the absence of such an explanation, "identity" could also refer to
trademark or the trade name of the drug, which means that a drug of
good quality but having a close similarity with another trademark or
trade name can be termed as a counterfeit drug. The term "source"
could be interpreted to mean the patent holder of that product or the
chemical entity. In both cases the definition would address IP issues
and not health issues.

However, this exception is somewhat of a victory for health groups
particularly since it clearly safeguards at least in the context of
medicines, the exceptions and limitations as well as other
flexibilities in the Kenyan Industrial Property Act.

The Bill also promotes the protection of IPRs, a private right, more
directly through publicly funded protection institutions and measures.
For example the Bill establishes an Anti-Counterfeiting Agency to
combat counterfeiting and their trade by receiving complaints
regarding protected goods. The Agency shall also appoint inspectors
with extensive powers to take action against goods suspected of
infringing IPRs (with or without a complaint by the IP holder)
including the right to enter and inspect any place reasonably
suspected for counterfeit goods and to make arrests without warrants.

Other measures allow a customs office to seize products at the border
on complaint by an IP holder. The process for complaint is simple in
that the owner of an intellectual property right that has valid
grounds for suspecting that the importation of counterfeit goods may
take place, can make an application for seizure of the product to the
relevant authority. The IP holder has to provide some evidence of an
IP right subsisting, and the relevant authority has to consider and
deal with the application in 3 working days to be satisfied that there
are reasonable grounds that the applicant is prima facie the owner of
IP right. The seizure may also take place on the initiatives of the
inspectors.

The Kenyan bill is one concrete case that shows how a term such as
"counterfeit" when used to address health problems can result in
national legislation aimed towards protecting the interests of IP
holders with potential damaging effects on access to medicines.

The latest definition for "counterfeit", proposed in the context of
IMPACT in a meeting held in Hammamet, Tunisia on 3-5 December 2008
suffers from the same problems. The WHO Secretariat's report by
referring to the definition in para 10 seeks endorsement of WHO member
states to the definition concerned.

The definition proposed is as follows:
"The term counterfeit medical product describes a product with a false
representation (a) of its identity(b) and/or source( c). This applies
to the product, its container or other packaging or labelling
information. Counterfeiting can apply to both branded and generic
products. Counterfeits may include products with correct
ingredients/components(d), with wrong ingredients/components, without
active ingredients, with incorrect amounts of active ingredients, or
with fake packaging."

"Violations or disputes concerning patents must not be confused with
counterfeiting of medical products. Medical products (whether generic
or branded) that are not authorized for marketing in a given country
but authorized elsewhere are not considered counterfeit. Substandard
batches of, or quality defects or non-compliance with Good
Manufacturing Practices/Good Distribution Practices (GMP/GDP) in
legitimate medical products must not be confused with counterfeiting."

The notes referred to above are as follows:

(a) Counterfeiting is done fraudulently and deliberately. The criminal
intent and/or careless behaviour shall be considered during the legal
procedures for the purposes of sanctions imposed.

(b) This includes any misleading statement with respect to name,
composition, strength, or other elements.

(c) This includes any misleading statement with respect to
manufacturer, country of manufacturing, country of origin, marketing
authorization holder or steps of distribution.

(d) This refers to all components of a medical product.

As with the IFPMA-WHO definition, one of the most problematic aspects
of the new definition on "counterfeit" is that it contains within its
definition IP issues as well as health concerns such as false
labelling and spurious drugs.

For example, the term identity is explained as including "any
misleading statement with respect to name" which could also mean brand
name, which is usually protected under trademark. Thus, a drug
consisting correct active ingredients but having a close similarity
with another trademark or trade name can be termed as a counterfeit
drug.

Similarly, in the new definition, false representation of identity and
source applies not only to labelling but also to the "product, its
container or other packaging"; thus false representation with regard
to any of those elements would make the product a "counterfeit" within
the scope of the definition.

This means that a product also may be classified as counterfeit for
example when the shape or color schemes of a product is similar to the
competing product irrespective correct labeling information and
contents. This is particularly problematic since presently the scope
of trademark protection covers not only traditional trademark like
words, signs or combination of both but also non-traditional trademark
taste, shape, color, touch and feel, smell, etc. Thus, in this case
the definition is more about protection of IP elements.

The definition also states that patent violations and disputes must
not be confused with counterfeits, but this means that the definition
includes other IP violations such as trademark violations.

The definition also includes some health elements of false labeling
and spurious drugs. As mentioned an approach that combines IP and
health issues under the rubric of "counterfeit" can then be used by
proponents of "anti-counterfeiting" initiatives motivated to achieve a
strong IP enforcement agenda and not by public health considerations.
Thus, the resulting effect is the protection of the interests and
rights of the IP holder rather than the patient, which could undermine
access to medicines and nascent pharmaceutical industries in
developing countries.

The inclusion of IP elements in the definition together with IP
enforcement prescriptions such as seizures at the borders (promoted by
the World Customs Organisation, Interpol, EU and US) will result in
seizures that have more to do with IP violations (with no relevance to
quality, safety and efficacy) cloaked under the rubric of public
health protection.

Evidence of this taking place is already emerging as shipments of drug
products of Indian companies meant for other countries are being
seized at European ports on charges of so called counterfeiting and
patent infringements. India is one the few countries that has an
advanced generic manufacturing sector and is a major supplier of
generic medicines to developing countries. According to a news report,
the Indian Pharmaceutical Export Promotion Council (Pharmexcil) has
asked the Commerce Ministry to ask the European Commission to relax
its regulations on patent and trademark issues so that drug shipments
on transit are not seized.

Another concern in relation to the definition is the scope of the
definition i. e. it relates to "medical products" covering a broad
range of items i. e. drugs, vaccines, diagnostic kits, medical devices
(such as surgical devices, scanners, x-ray machines) as well as the
raw material used for production. It is not clear from where WHO
derives its mandate to deal with "medical products". WHA resolutions
41.16, 47.13 and 52.19 referred to the draft resolution only refer to
medicines, drugs and pharmaceutical preparations. They do not provide
a mandate to deal with "medical products".

The definition speaks of counterfeiting as an act done "fraudulently
and deliberately" thus implying the presence of the element of
intention; it also states that "criminal intent and/or careless
behavior" should be considered for purposes of imposing sanctions.
This means that even in the absence of intention (for example, in
cases of careless behavior), an act could amount to counterfeiting.

This is contradictory and confusing. If an act is done fraudulently
and deliberately, then the issue of "careless behaviour" for purposes
of sanction should not arise. Also the second sentence to the note
speaks about criminal intent "and" careless behaviour, which is also
contradictory since an act cannot be careless and intentional at the
same time.

In addition, according to the note (a) explaining the definition,
element of intent will be considered for the purpose of imposing
sanction. This implies that the element of intent will only be
assessed at the trial stage in court. This does not prevent measures
such as seizing goods at the border on the basis of a complaint by an
IP holder on mere suspicion of "false representation" (be it
intentional or unintentional). Secondly, it implies that the court
will only consider the element of intent for purposes of deciding the
nature of sanctions.

There is also concern over the imprecise and open-ended nature of the
definition in particular explanations to the terms "identity",
"source" which provides scope for further addition of any other
elements and thus abuse. Further in the pharmaceutical context one is
not clear regarding the meaning of the terms country of manufacturing,
country of origin, marketing authorization holder and steps of
distribution. For instance, the term country of origin can mean the
country of origin of formulation or the country of origin of active
pharmaceutical ingredient. The implication of this open ended terms is
that good quality products will be termed as counterfeits.

Further, national laws especially drug regulatory laws already address
the quality and safety of drugs issues from a public health angle.
These laws use terms like misbranded drugs, spurious drugs and
adulterated drugs. Adoption of the new definition may lead to
complications at the national level and require amendments to present
laws.

The consequence of using the term "counterfeit" to ensure good
quality, safe and effective medicines could ironically become an
obstacle blocking access to and availability of generic medicines in
developing countries. Thus, such an approach has to be given serious
consideration. Instead of using terminology as controversial and
politicized as "counterfeit", it may be better to list public health
problems, and deal with these problems directly from a public health
perspectives.

The mandate given to WHO through resolution WHA 41.16 on rational use
of drugs in 1988 was for the WHO to initiate programmes not only on
"counterfeit" but also to address problems of "falsely labelled",
"spurious", and "substandard" drugs. However, while the term
"counterfeit" appears to have gained momentum in the WHO, the other
concepts have been sidelined.

Legitimate health concerns pertaining to quality, safety and efficacy
of medicines that exist with regard to false labelling, spurious, and
substandard have to be addressed from a public health lens rather than
being confused and complicated by using the perspective of IP rights
holders and IP enforcement. +

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