The South Centre has made three written submissions on some of the key actions that need to be taken to strengthen the access to medicines for people in developing countries.

• The Need to Assert the Primacy of the Right to Health over Trade and IP Rules
• A Binding International Treaty on Medical Product R&D under the Auspices of the UN
• Limitations of the Paragraph 6 System of the TRIPS Agreement

These submissions were made to the High-level Panel on Access to Medicines established by the United Nations Secretary-General , Mr. Ban Ki-moon. Below is a summary of the South Centre’s three submissions.

By the Development, Innovation and Intellectual Property (DIIP) Programme, the South Centre

A High-Level Panel on Access to Medicines convened by the UN Secretary-General is currently considering a number of proposals to address the policy incoherence between intellectual property (IP) rights, human rights, trade rules and access to medicines.

The High-Level Panel has received 177 submissions from a diverse range of stakeholders including patients’ groups, policy-makers, intergovernmental organizations and pharmaceutical companies. It has also conducted two global public hearings and dialogues.

The final report of the High-Level Panel will be submitted to the UN Secretary-General in June 2016. The Secretary-General will present the report to the UN General Assembly to take further action.

The South Centre made three submissions to the High-Level Panel in response to the call for contributions. These submissions are based on the premise that the right to health for all must prevail over trade and intellectual property rules. The three submissions are publicly available on the website of the High Level Panel: http://www.unsgaccessmeds.org/list-of-contribution/, listed as South Centre,  No. 67, No. 112 and No. 113.

1. The Need to Assert the Primacy of the Right to Health over Trade and IP Rules

An effective way to address policy incoherence between the right to health over trade and IP rules is first and foremost, to assert the primacy of the right to health for all, over trade and intellectual property rules. The attainment of good health and well-being is an objective as well as a human right, whereas trade or intellectual property are means. Thus there should be primacy of health over trade or IP. In this context, the South Centre submitted a series of recommendations to the HLP for its endorsement.

First, developing countries should tailor their intellectual property regimes to their own domestic technical, economic and social needs and capacities. To this aim, these countries should incorporate the TRIPS flexibilities into national patent law to enhance access to medical products. The implementation of these flexibilities is a means to balance patent rights with the right to health, stimulate competition, protect consumers, and facilitate access to generic medical products that are accessible and affordable to governments and consumers.

Second, a key flexibility is that countries are free to determine in their own way the definition of an invention, the criteria for judging patentability and patentable subject matter, the rights conferred on patent owners and what exceptions to patentability are permitted, subject to meeting the minimum standards laid down in the WTO TRIPS Agreement. Countries should apply a rigorous definition of patentability criteria. Moreover, revision of national patent laws to allow and effectively use other flexibilities should be promoted. These include: compulsory licenses and government use authorization, parallel importation, research exception, limit the extent of test data protection, and develop  robust patent examination systems with pre-grant and post-grant opposition.

Third, patent offices should be encouraged to reject pharmaceutical patent applications as not constituting inventions for the following: new dosage forms of known medicines, new salts, ethers, esters and other forms of existing pharmaceutical products, discovery of polymorphs of existing compounds, enantiomers, therapeutic, diagnostic or surgical methods of treatment and claims for new uses of known products.

Fourth, countries should take measures to control anti-competitive practices and abuse of intellectual property rights in their jurisdictions. Multilateral trade rules allow substantial flexibility in the development and application of competition law and policy. As a consequence of accommodating the variety of potential competition approaches, remedies available to address anti-competitive behaviour may permit a broader range of remedial action than some other public health-related flexibilities associated solely with patents.

Fifth, developed countries should stop the use of unilateral trade measures and free trade and investment agreements as a means to pressure countries to undertake TRIPS plus commitments. The recent rise of bilateral and multilateral FTAs threatens public health and access to affordable medicines. Strong trade and power asymmetries exist between developed and developing countries during FTA negotiations. Trade-oriented pressures are applied to developing countries to surpass the protection afforded by TRIPS and to diminish the system of the TRIPS flexibilities. These are ill-suited ‘TRIPS-plus’ solutions.

Furthermore, the special rapporteur on the right to health has pointed out that: “TRIPS-plus provisions in FTAs differ from agreement to agreement, but their purposes are by and large to: Extend the patent term, introduce data exclusivity, introduce patent linkage with drug registration and approval, and create new enforcement mechanisms for IPRs. There should be the promotion of reform of African regional IP organizations – ARIPO and OAPI – in order that they accommodate the flexibilities available under TRIPS such as the transition period for LDCs as well as application of strict criteria of patentability. The current operations of ARIPO do not facilitate the full use of TRIPS flexibilities and instead erects patent barriers to the importation and local production of affordable medicines.

Sixth, LDCs should make (and should be provided assistance to do so) effective use of the current transition period that allows them to not apply pharmaceutical patent protection, test data protection or exclusive marketing rights; and recommend that the current waiver be made permanent until the time an LDC graduates from that status. At present, LDCs are not be obliged to implement or apply or to enforce patents as well as test data protection for pharmaceutical products, or to make available a mechanism for filing patent applications for pharmaceutical products (mailbox) or to grant exclusive marketing rights to such applications, until 1 January 2033 or the expiry of such later transition period that may be granted by the WTO Council for TRIPS. LDCs should actively use the created policy space in this transition period and take immediate steps to amend their respective national laws to provide for such exclusions.

Seventh, there should be a ban on the application of non-violation and situation complaints with respect to the TRIPS Agreement. Introduction of non-violation complaints under TRIPS could enable legal challenges to regulatory and public policy measures that may be consistent with the obligations under the TRIPS Agreement. For example, public health measures such as issuance of compulsory licenses, or packaging restrictions on harmful products could be challenged even if these are consistent with TRIPS obligations if non-violation complaints are allowed. Unlike non-violation complaints in GATT, where a finding of nullification or impairment of the expected benefits would lead to an adjustment of the impugned tariff measure, in TRIPS this would lead to an amendment of the substantive obligations under the agreement. In this way, it can undermine the balance of rights and obligations and interests of right holders and users in TRIPS. Moreover, non-violation complaints could lead to narrowing the scope of flexibilities under the TRIPS Agreement. The experience of non-violation complaints under GATT suggests that the existence of non-violation complaints has led the panels to adopt a narrow interpretation of the provisions of GATT. For example, while TRIPS requires the grant of patents in all fields of technology if the patentability criteria are satisfied; it does not define novelty, inventive step or industrial applicability. This allows for diversity in the treatment of patent applications in different territories which enables developing countries to define what is patentable very narrowly. If non-violation complaints were allowed, it is possible that decisions to reject a patent based on a strict definition of the patentability criteria may be challenged. Therefore, non-violation complaints would seriously impair the balance of rights and obligations enshrined under TRIPS.

Eighth, WIPO and other international organizations should provide technical assistance on IP policy to developing countries that builds their capacity on the use of TRIPS flexibilities.

Ninth, WIPO and WTO should undertake human rights impact assessments prior to any norm-setting activities, especially if they have an impact on public health.

Tenth, the results of publicly funded research should be made available to all, and not be eligible for patent protection. Global, open access to publicly funded research should be promoted to advance collaborative scientific research and avoid unnecessary and costly duplication of work.

There should be greater transparency by pharmaceutical firms, product development partnerships, biotechnology firms and other entities, in disclosing the real costs of research and development, including in carrying out clinical trials, and for them to share the results of clinical trials.

New initiatives and business models to stimulate R&D in medical products that “de-link” the cost of R&D from prices should be promoted. However, principles need to be established to ensure that if public resources are used to promote de-linkage, there is full transparency on the real costs of activities; disclosure of terms in contractual agreements for R&D and for IP; and that priorities for R&D are defined in accordance to public health needs.

2. A Binding International Treaty on Medical Product R&D under the Auspices of the UN

The second submission by the South Centre recommends that negotiations be undertaken for a UN treaty on R&D for medical products.

The current incentive model for pharmaceutical research and development (R&D) has failed to incentivize R&D for new medicines to treat a number of diseases that do not offer substantially profitable markets to private firms. Several reports and studies, as well as the WHO Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property (GSPOA) adopted by WHO Member States (2003-2008) have acknowledged this problem. On one hand, there is little investment in R&D in relation to diseases that are prevalent in developing countries, since large pharmaceutical firms focus efforts on developing products to satisfy the demand of wealthy markets. On the other hand, products that are subject to patents and other forms of exclusive rights are normally sold at prices that are out of reach for large sectors of the population, both in developing and developed countries.

In April 2012, the WHO Consultative Expert Working Group (CEWG) on R&D Financing and Coordination recommended the WHO member States to start negotiations on a binding international instrument on health R&D under article 19 of the WHO Constitution, as the best way to create an appropriate framework to ensure priority setting, coordination, and sustainable financing of affordable medicines for developing countries. The CEWG stated that “… a binding instrument on R&D is necessary to secure appropriate funding and coordination to promote R&D that is needed to address the diseases that disproportionately affect developing countries.” The CEWG recommendation was made after considering a number of proposals that recommended the conclusion of a binding R&D treaty, including a proposal by Bangladesh, Barbados, Bolivia and Suriname for WHO discussions on a biomedical R&D treaty. However, this recommendation of the CEWG has still not been adequately considered by the WHO member States owing to political opposition from developed countries to the idea of an alternative R&D mechanism.

After the call for a global pharmaceutical R&D (GSPOA and CEWG), there have been numerous initiatives and policy processes related to global health innovation. In addition, there are ongoing efforts through product development partnerships (PDPs) to step up R&D for neglected diseases. There is a major risk that the multiplication of such proposed R&D frameworks could lead to further duplication and fragmentation and lack of consistent application of the CEWG principles that R&D mechanisms must be based on – affordability, effectiveness, efficiency and equity.

A binding international instrument or international treaty on R&D can be negotiated under the auspices of the UN to provide an adequate framework to define medical R&D priorities and ensure the coordination and sustainable financing of R&D on drugs that could be made available at affordable prices.

The conclusion of a binding R&D instrument under the UN will contribute to the realization of the Sustainable Development Goals (SDGs), and particularly the health related SDG Goal 3 and Targets 3.8 to achieve universal health coverage and access to quality essential health-care services and access to safe, quality and affordable essential medicines and vaccines for all, and 3.11  to support the R&D of vaccines and medicines for the communicable and non-communicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health that affirms the right of developing countries to use to the full the provisions in the TRIPS Agreement regarding flexibilities to protect public health, and, in particular, provide access to medicines for all.

A binding international R&D instrument under the UN would provide a global framework for financing R&D in a way that delinks costs from prices for new medical products and for improved coordination to avoid the fragmentation of medical R&D efforts.

A global instrument on R&D of medical products negotiated at the UN could have the following specific objectives:

(i) To promote R&D for all diseases, conditions and problems (including non-communicable diseases), while prioritizing those for which there is little R&D investment such as neglected diseases that disproportionately affect developing countries;

(ii) To set priorities for R&D on the basis of the global disease burden;

(iii) To provide alternative incentives to the intellectual property systems for the engagement of private and public actors involved in R&D based on public health needs rather than market expectations;

(iv) To develop sustainable financing mechanisms including pooled financing to increase available resources for R&D;

(v) To promote coordination of R&D and make better use of existing R&D capacities of the private and the public sector in both developing and developed countries;

(vi) To build R&D capacity in developing countries;

(vii) To promote greater transparency in the costs of R&D and sharing of data and information, particularly in early research and clinical trial stages;

(viii) To establish ethical criteria and financial mechanisms for conducting clinical trials with full disclosure of test data;

(ix) To promote that the results of R & D are in the public domain or otherwise accessible to all populations.

Though the proposed binding international legal instrument on biomedical R&D pursues public health objectives, the establishment of an alternative mechanism for medical R&D will have to necessarily involve multiple government agencies besides ministries of health, such as finance, trade, science and technology, and industry. As this proposed instrument would address a diverse range of government agencies and also a number of the SDGs, it is submitted that it will fall within the ambit of the UN to negotiate a binding international legal framework or convention on medical product R&D.

3. Limitations of the Paragraph 6 System of the TRIPS Agreement

The third submission by the South Centre concerns the ability of countries to procure lower priced medical products.

Pursuant to paragraph 6 of the 2002 Doha Declaration on TRIPS and Public Health the WTO General Council adopted a decision on August 30, 2003 allowing WTO members with insufficient or no pharmaceutical manufacturing capacity to import generic medicines under a compulsory license, as a waiver from the general requirement under Article 31 (h) of TRIPS that a CL can be issued only predominantly for being used by domestic manufacturers. In 2005 the WTO General Council adopted a Protocol amending the TRIPS Agreement which incorporated this mechanism as an amendment to the TRIPS Agreement (Article 31bis). The WTO Secretariat is urging member States to ratify the August 30th Decision to bring Article 31bis of the TRIPS Agreement into force.

While the Paragraph 6 system has been celebrated as a ‘solution’ to the problems faced by developing countries and LDCs in accessing affordable medicines, in actual practice it has not contributed to address such problems. Only a limited number of countries have adopted legislation to implement the August 30th Decision as an exporting country. Moreover, there has been very limited use of the system. Only one importing country (Rwanda) used the mechanism to import cheaper life-saving medicines from the Canadian generic company Apotex for 21000 HIV/AIDS patients. This is largely due to the fact that the system is unnecessarily burdensome and complicated. The Paragraph 6 system places obligations on importing countries making use of the system that are more onerous than those for countries that can issue a compulsory license  (CL) to supply the domestic market.

The experience in making use of the system also suggests that there are hurdles within the Decision that make it difficult for countries to import a generic drug under a CL, and also makes it difficult for generic manufacturers to export a drug under CL. In the Canada-Rwanda case, the only instance in which the Paragraph 6 system has been used, it took almost 27 months to meet all of the requirements. Thus, the system is less effective than it should be. Therefore, it is important that WTO members carefully examine the reasons behind the limited use of the system and address systemic deficiencies before making it permanent as article 31bis of the TRIPS Agreement (currently in the process of approval by WTO members).

Some of the key problems in using the Paragraph 6 system are:
Generic companies need to undertake negotiations for voluntary licenses with the patent holder before applying for a CL. Such negotiations may be protracted and complex, and a source of considerable delay and discourage generic manufacturers to participate in the process.

The Decision comprises a succession of complex procedural steps. First, a potential purchaser has to forecast the need for a medicine and identify a generic producer willing to participate in the process and fill the drug order. Second, the manufacturer has to try to negotiate a voluntary license with the patent holder. Third, if the negotiations are unsuccessful, a CL application must be filed in the home country of the generic producer. Fourth, if a patent exists in the country of export the generic producer has to apply for and obtain a CL in that country too. Each of these steps is time-consuming, involves substantial financial expense and holds no guarantee of success.

A country importing medicines using this system must also give a written notification to the TRIPS Council which must include the specific names and expected quantities of the product needed. Unless the importing country is classified as an LDC, it must also specify whether the product is under patent, and provide information that establishes that it lacks sufficient manufacturing capacity in the pharmaceutical sector to develop the drug being ordered.

The system also imposes conditions for commercialization of the products made under the CL. They must be clearly identified as being produced under the system through specific labelling; they should be specially packaged to be distinguishable from the branded product and in respect of its shape or colour. The generic manufacturer must post specific information about the quantity of the product, its destination and distinguishing features. These ‘anti-diversion’ measures are to ensure that the product will only be exported to the destination stated in the CL.

The Paragraph 6 system requires a drug-by-drug, country-by-country and case-by-case decision-making process. Indeed, the CL application must stipulate the destination and the quantity of drugs that are to be purchased and exported under the licence. Drug needs must therefore be determined with precision beforehand. If more patients are included, the only way to purchase more drugs is to begin the process again. A stock-out due to the procedural hurdles may lead to the treatment being interrupted and as a consequence patients may develop increased drug resistance (as in case of HIV/AIDS), creating the need for more expensive treatment. Conversely, if the needs have been overestimated, re-exportation of medicines imported under the system to another developing or least developed country in a similar situation is not permitted, unless there is a regional trade agreement between the two and the majority of its members are LDCs.

There is substantial scope for the patent holder to undermine the system. For example, the patent holder may decide at any time to offer the medicines at lower cost or for free, thus frustrating any efforts made to use the system in that particular case. This creates a huge uncertainty and additional risk and disincentives for potential suppliers. In view of these limitations of the paragraph 6 system, WTO members should be dissuaded from ratifying the protocol to the TRIPS Agreement incorporating the system under Article 31bis of TRIPS and should instead undertake a comprehensive review and evaluation of the paragraph 6 system.

The High-level Panel on Access to Medicines

The High-Level Panel is co-chaired by Ruth Dreifuss, former President of the Swiss Confederation and former chairperson of the WHO Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH), and Festus Gontebanye Mogae, former President of Botswana. The other members of the High-Level Panel are Andrew Witty, CEO of the multinational pharmaceutical company GlaxoSmithKline, Prof. Sakiko Fukuda-Parr, Awn Al-Khasawneh, the former Prime Minister of Jordan, Celso Amorim from Brazil, Winnie Byanyima, Executive Director of Oxfam International, Shiba Phurailatpam, Director of the Asia Pacific Network of People Living with HIV (APN+), Precious Matsoso from South Africa, Yusuf Hamied, Chairman of the Indian generic pharmaceutical company Cipla, Justice Michael Kirby, former judge of the High Court of Australia, Prof. Ruth Okediji, Prof. Jorge Bermudez, VP of Fiocruz, Prof. Kinga Goncz, Maria C. Freire (UNITAID), and Stephen Lewis.

An Expert Advisory Group of individuals with expertise and experience on matters including human rights, trade, innovation and public health as well as senior technical staff from WHO, UNAIDS, UNDP and other intergovernmental organizations will assist and advise the High-Level Panel.

Source: South Bulletin 91, 18 June 2016