South Asia Watch on Trade, Economics & Environment (SAWTEE)

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Understanding Wto

TRIPS and Public Health: Concerns of developing and least developed countries

Prior to the establishment of the World Trade Organisation (WTO), multilateral trade used to be governed by the General Agreement on Tariffs and Trade (GATT). Founded in 1948, the GATT’s mandate was to merely deal with trade in goods. After the Uruguay Round (UR) of multilateral trade negotiations established the WTO in January 1995 by replacing the GATT, the multilateral trade framework extended beyond trade in goods.

As a rules-based multilateral trade body, the WTO also deals with trade in services and intellectual property rights (IPRs). Its remit expands from cross-border transactions to areas – such as public health, food security and employment – which crucially affect domestic development policies. Among these, in recent years, the global patent rules – as enshrined in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) – have generated much controversy. 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 lifesaving drugs by allowing companies to create a monopoly and charge high prices whereas 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. TRIPS and Patent TRIPS is the binding and most comprehensive multilateral agreement on IPR. It sets out minimum standards of protection for each category of IPRs, including patents. The implementation of TRIPS is subject to the “requirements” of the agreement and the “commitments” the members have made (during their accession to the WTO). The Agreement requires member governments to harmonise their national IPR system with global rules.

WTO members have to 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). Such a patent protection must be available for inventions for at least 20 years.

TRIPS has set three criteria to qualify for a patent – an invention has to be new (novelty), it must be an inventive step (non-obviousness), and it must have industrial applicability (useful). The Agreement, however, states that governments can refuse to issue a patent for an invention if its commercial exploitation is prohibited for reasons of public order or morality. They can also exclude diagnostic, therapeutic and surgical methods, plants and animals (other than microorganisms), and essentially biological processes for the production of plants or animals (other than non-biological and microbiological processes).

TRIPS and Public Health Concerns

Developing and least developed countries face critical public health problems ranging from “production, distribution and market” to “access, quality, cost and affordability”. Persistent and widespread poverty, food insecurity and vulnerability in these countries put further pressures on public health. In addition, the TRIPS Agreement is likely to bring further challenges with severe implications on public health, mainly in relation to access to medicines at cheaper and affordable prices. It is, therefore, important that developing and least developed members understand how TRIPS relates to public health, how the agreement could affect the public health situation in their countries, and what flexibilities the agreement provide them to address public health concerns.

Initiatives at the WTO Level

Some initiatives have been taken at the WTO level to address the concerns of poor countries. In the main Doha Declaration (adopted at the fourth WTO Ministerial in Doha in 2001), WTO member governments stressed that it is important to implement and interpret TRIPS in a way that supports public health, by promoting both access to existing medicines and the creation of new medicines. They, therefore, also adopted a separate Declaration on TRIPS and Public Health and agreed that TRIPS does not and should not prevent members from taking measures to protect public health. They underscored countries’ ability to use the flexibilities that are built into TRIPS, including “compulsory licensing” and “parallel importing”. They also agreed to extend exemptions on pharmaceutical product patent protection for LDCs until 2016.

On the issue of providing flexibility to countries that are unable to produce copies of patented drugs domestically, members, in Paragraph 6 of the Declaration, assigned further work to the TRIPS Council to sort out how to provide extra flexibility to such countries.

Article 31(f) of TRIPS says products made under compulsory licensing must be “predominantly for the supply of the domestic market”. This applies to countries that can manufacture drugs. It limits the amount they can export when the drug is made under compulsory licence. And it has an impact on countries unable to make medicines and therefore wanting to import generics. They would find it difficult to find countries that can supply them with drugs made under compulsory licensing.

This problem was resolved on 30 August 2003 through a “Decision on the Implementation of Paragraph 6”. WTO members agreed on legal changes to make it easier for countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves. The decision waives exporting countries’ obligations under Article 31(f) – any member country can export generic pharmaceutical products made under compulsory licences to meet the needs of importing countries, provided certain conditions are met. The waiver is interim, the ultimate goal was to amend TRIPS itself within the first half of 2004. However, this deadline has been missed.

In this regard, the LDCs have demanded that there is a need to urgently amend TRIPS to incorporate the “30th August 2003 Decision on the Implementation of Paragraph 6 of the Declaration of TRIPS and Public Health” as a permanent solution to the problems of countries with insufficient or no manufacturing capacity. Patents, Drug Prices and Access There is a growing concern in the Southern world that the monopoly created by patents on pharmaceutical products would increase drug prices and thus would lead to public health crisis in the developing and least developed countries. However, many others opine that since over 90 percent of the drugs on the World Health Organisation’s (WHO) “essential drugs list” are off-patent, it would not be wise to conclude that the patenting of pharmaceutical products under TRIPS would result in an increase in the price of all medicines and would negatively affect the public health situation in the developing and least developed countries. But countries that are demanding for fair treatment of IPRs in the field of public health are not convinced with these arguments for the following reasons. First, there is a greater chance of an increment in the price of the remaining 10 percent of pharmaceutical products, 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 be high due to patents. Thirdly, even in the case of 90 percent of drugs under the essential drugs list, there can be an increase in price if more effective and improved drugs enter the market replacing the drugs under the essential drugs list. Therefore, the global negotiations dealing with pharmaceutical product patents and public health at the WTO hold importance for developing and least developed countries. The negotiations should focus on ensuring cheaper and affordable access to medicines and must enable these countries to capitalise on TRIPS’ flexibilities. While enacting intellectual property laws at the domestic level, as required by TRIPS, these countries need to make maximum use of TRIPS’ flexibilities (such as compulsory license and parallel import). However, it remains to be seen whether or not future negotiations would provide countries with “more flexibilities” to protect public health.

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