Intellectual Property Right
Public Health Concerns for Nepal
Publised: www.kantipuronline.com , 5 October 2005
By: Kamalesh Adhikari


Nepal faces critical public health problems ranging from 'production, quality, distribution and market' of drugs to their 'access, cost and affordability'. In addition, WTO/TRIPS Agreement is likely to bring further challenges with severe implications on public health, mainly in relation to access to drugs at cheaper and affordable prices.

In the recent past months, Nepal's membership in the World Trade Organisation (WTO) has drawn wider attention of the stakeholders. Economists and development experts are busy in calculating the costs and benefits of WTO agreements, civil society organisations are debating on whether or not Nepal can benefit from the WTO, and the government is undertaking the required policy, law and institutional reforms to comply with WTO regime. However, one group that is still unaware of the WTO and these developments is the public.

This article is an attempt to sensitise the public on issues of public health and the WTO's intellectual property right (IPR) rule, i.e. patent. The patent rules in the WTO are governed by Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The Agreement is a binding and the most comprehensive multilateral agreement on IPRs. The Agreement requires member governments to harmonise their national IPR system with global rules and provide patent protection for any invention - whether it is a product (such as a medicine) or a process (such as a method of producing the chemical ingredients for a medicine) - for at least 20 years. Such patent rules have, however, generated much controversy in recent years.

The North-South divergence is apparent - particularly in relation to access to medicines - during WTO negotiations and the debate continues on how to balance the interests of both. The Southern countries perceive that the patent rules are set to further restrict poor people's access to vital life-saving drugs by allowing companies to create a monopoly and charge high prices. The Northern countries argue that the strengthening of IPRs is essential for encouraging companies to invest more in research and development and find solutions to global health problems by producing new or more effective drugs.

Nepal has committed to implement TRIPS by 2006. As a least developed WTO member, Nepal will have to grant patent protection to pharmaceutical products by 2016. With regard to this, there is a growing concern that the monopoly created by pharmaceutical product patent would lead to an increase in drug prices. Since over 90% of the drugs under the World Health Organisation's 'essential drugs list' are off-patent and a study on drug prescribing practices in Nepal shows that 86% of prescribed drugs are from the essential drugs list, it cannot be concluded that the patenting of pharmaceutical products under TRIPS would result in an increase in the prices of all medicines. However, there are some important issues that must not be ignored while dealing with patents and access to medicines.

First, there is a greater chance of an increment in the prices of the remaining 14% drugs, which are not in the essential drugs list. Secondly, while drug prices for the new and existing (known) diseases such as HIV/AIDS are already higher, there is every possibility that the drug prices for the new and emerging (unknown) diseases will also be high due to patents. Thirdly, even in the case of 86% of the drugs prescribed under the essential drugs list, there can be an increase in the prices of drugs if new and more effective or improved drugs enter the market replacing the drugs under the essential drugs list.

Therefore, WTO negotiations dealing with pharmaceutical product patents and public health is a matter of concern for Nepal too. While enacting intellectual property laws at the domestic level, as required by TRIPS, Nepal has to make maximum use of TRIPS' flexibilities to minimise the harms of intellectual property protection on pharmaceutical products. Within TRIPS, there are two major flexibilities that can help poor countries to address the problems resulting from patents-induced increase in drug prices - compulsory licensing and parallel importing.

Compulsory licensing is a process whereby countries are permitted to give licenses to companies or individuals to manufacture the patented products without the patent owner's consent. However, since Nepal lacks manufacturing capacity to produce drugs, it might affect the country's ability to capitalise on this flexibility.

In order to address the insufficient manufacturing capacity of countries like Nepal, there has been a consensus among WTO members that such countries can import copied versions of drugs manufactured under compulsory licensing. But this flexibility is also not without problems. For example, how can Nepal import copied versions of drugs if the required drugs have not been manufactured by other countries or companies? Will not it then compel Nepal to import patented drugs at higher prices? Besides, even if copied versions of drugs are available in the market of another country, will that country or the company manufactured it export the drugs without any increase in prices? Lastly, even if the drugs are available at same prices, does that guarantee that the most Nepalese - as they are poor - would be able to afford them? For instance, the consumers in Thailand might afford to pay higher prices than consumers in Nepal.

Given these facts, Nepal should develop a concrete negotiating strategy at the WTO and collaborate with like-minded countries demanding for further clarity and improvement in the provisions of TRIPS so that countries with insufficient or without manufacturing capacity could fully capitalise on flexibilities maintained in the Agreement. Focus should also be given on research and development in the pharmaceutical sector at the national level. This would not only help in strengthening the capacity of the domestic pharmaceutical companies to manufacture new and more effective drugs but would also be instrumental in capitalising on the vast amount of medicinal plants that the country possesses.