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Will cut-price drugs for poor countries affect
rightsholders?
A temporary waiver of Article 31(f) of TRIPS agreement aims to improve
medicinal drugs access for poor nations by allowing developed countries to
suspend patent rights. But what impact will this have on rightsholders? Jeremy
Phillips, IP consultant for Slaughter and May, discusses the implications with
Greg Bousfield�
A
deal to improve access to medicines for developing countries has been made
possible by a temporary waiver of Article 31 (f) of TRIPS (Trade Related
Intellectual Property Agreement) which otherwise requires medicines for �any
such use� be �authorized predominantly for the supply of the domestic market
of the Member authorizing such use.�
The new agreement is basically the same as the first failed attempt last year,
but gives rightsholders more �comfort� by promising that all parties will
work hard to prevent diversion of the cheaper drugs back to producer country
markets, the European Commission says. The Commission is also playing down its
efforts to attach a more precise definition of the �national emergency�
provision which can partially suspend patent-holders rights, under TRIPS Article
31(b).
"I don�t think players on either side want to risk getting stuck with
definitions at this stage," comments Jeremy Phillips, IP consultant for
Slaughter and May. "Instead, they are trying to negotiate to get what they
want without a legal definition. TRIPS thus preserves its flexibility."
Less flexibility and more legal certainty was perhaps what the Commission wanted
last year when it proposed adding a new paragraph to Article 31 to clarify the
national emergency or other conditions required to activate compulsory
licensing. This allows a developed country government to suspend patent rights
(in relation to price) and export medicines to a poorer country in response to a
request from that country in relation to urgent public health needs.
Apprehensions that IP rights will be weakened by the present deal are not borne
out by the counter-mechanisms in place, Phillips says. "Any attempt to make
profit out of this is going to be very vigorously pounced on by courts where
patent are infringed. Producers may include tracing material in the product
which would enable the rightsholder to determine which distributor the material
in question has gone through, so they could litigate against distributors for
allowing the stuff to come back. Rightsholders also have a potential second bite
of the cherry in relation to infringement of trademarks � Article 31 only
deals with patents � if the drugs end up being re-sold in developed
countries," he says.
The EU has also acted to allay rightsholders� fears. In the wake of the
subsequent failure to get US support for a tighter definition in the WTO, a
Council Regulation to prevent import of tiered priced (discounted) medicines
into the EU has been adopted. This offers manufacturers and exporters of
strongly discounted medicines reinforced prevention at border level against
imports into the EU market where higher prices prevail.
Phillips agrees that US participation in the deal has also been at least partly
driven by the need to make concessions to poorer countries, post-September 11.
However, the circumstantial nature of this deal does not invalidate the
usefulness of TRIPS, he believes. "TRIPS is a set of compromises between
those who do and don�t possess IP, there is a huge amount of it which remains
to be interpreted," he says. "Through mechanisms of discussion, rather
than unilateral actions, you come closer to consensus although that might not
reflect the literal wording of TRIPS."
The deal does not establish a precedent in relation to developed countries
needing cheap drugs in a national emergency, such as occurred with anti-anthrax
treatment Ciprobay, which manufacturer Bayer reduced in price for the Canadian
and US Governments to avoid the threat of a compulsory order � although it is
not clear how that threat would have been carried out. "The criteria for
dispute resolution is very different than with poorer countries," he says
"With two developed countries involved in this sort of argument, one
country always has the ability to pay the other."
Although the Commission is adamant that the latest deal means the "game is
over", it has perhaps not played its last card. It wants Article 31 (f) to
be amended to reflect the temporary waiver. "Further work shall be
undertaken in due course in order to transpose the waiver into a definitive
amendment of the TRIPs Agreement. This process will have to be concluded within
six months after its initiation," the Commission says.
(28/11/03)
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