In a significant development, the Agreement on Trade Related Aspects of Intellectual Property Rights of the World Trade Organisation has been amended after a decade to allow developing countries, and the least developed countries, access to otherwise patented medicines. The amendment took effect on Jan 23.
The agreement provides a secure basis for protection of Intellectual Property Rights (IPRs) including, but not limited to, trademarks, copyrights, and patents. At the same time, the agreement recognises the rights of governments to adopt measures for public health and other public interest reasons and to prevent the abuse of IPRs. The avowed purpose is to strike a balance between the interests of IPR holders and those of society at large.
Under patent provisions (Articles 29-34) of the TRIPs Agreement, inventions have to be protected against unauthorised use so that creators can reap the benefits of their intellectual labour and investment. However, to prevent the abuse of patents, governments, under certain conditions, can issue compulsory licences, allowing a competitor to produce the product or use the process under licence (Articles 30-31). This provision has been useful in preventing a shortage of essential products, such as pharmaceuticals, in developing countries.
The amendment will give legal certainty that countries with limited manufacturing capacity will be able to import generic versions of life-saving drugs at affordable prices
As a rule, compulsory licences are granted only after an unsuccessful attempt has been made to acquire a voluntary licence on ‘reasonable’ commercial terms and conditions within a ‘reasonable’ period of time.
However, in special circumstances, such as a national emergency, governments may grant compulsory licences without seeking an authorisation from the right holder. In any event, the right holder shall be provided compensation taking into account the economic value of the authorisation.
There was one problem however. Clause (f) of Article 31 provided that compulsory licences shall be issued predominately for supply in the domestic market of the member making such authorisation.
This means if a country did not produce a particular medicine, it would not be in a position to issue compulsory licences for supply of the medicine to its people. The clause hit the LDCs and developing countries hard since they had a limited capacity to manufacture life-saving drugs. In particular, this exacerbated the situation for HIV-ravaged countries.
Mindful of the aforementioned loophole in the TRIPs Agreement, the 2001 Doha Declaration, which launched the current Doha Round of multilateral trade negotiations, recognised that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement.
The Declaration asked the Council for TRIPS, which comprises all WTO members and deals with IPR related matters, to address the problem.
Following deliberations, WTO members adopted a waiver — in WTO parlance a decision which temporarily allows the members to depart from some provisions of a covered agreement — providing that notwithstanding Article 31 (f) of the TRIPs Agreement, in case a country could not ensure that its people have access to inexpensive life-saving medicines, it may, through the Council for TRIPs, request another member having sufficient manufacturing capacity to grant a compulsory licence for producing the medicines, which then would be exported to the requesting country.
However, since an arrangement put in place through a waiver is time-bound and the need for the public to have affordable access to vital medicines is of a permanent nature, in 2005 WTO members adopted an amendment to Article 31 (f) of the TRIPs Agreement.
The amendment was to come into effect after it had been ratified by at least two-thirds of the members as per their national constitutional or legal procedures. The threshold was reached in January 2015 with ratification by the United Arab Emirates. Pakistan ratified the amendment in 2010.
The amendment will thus give legal certainty that the countries with limited manufacturing capacity will be able to import generic versions of life-saving drugs at affordable prices. In this way, such countries would be in a better position to fight lethal diseases. Since most of these diseases are contagious, it will also benefit rich countries having sufficient manufacturing capacity.
The amendment is also significant in that it marks the first occasion that a WTO covered agreement has been amended. Since the amendment has been made to benefit poor and vulnerable countries, it becomes doubly significant, especially in view of the widespread criticism that multilateral trade rules are largely geared towards protecting the interests of developed countries and their mega enterprises.
Published in Dawn, Business & Finance weekly, February 6th, 2017
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