Strong support for LDC pharmaceuticals exemption request

Original Publication Date: 
17 June, 2015

Third World Network
Published in SUNS #8041 dated 15 June 2015
 
Geneva, 12 Jun (Kanaga Raja) -- A large majority of Members, mainly developing countries, have voiced strong support at the meeting of the TRIPS Council (9-10 June) for the request by the Least Developed Countries (LDCs) for an extension of the transitional period with regard to the intellectual property protection of pharmaceutical products, which is set to expire on 1 January 2016.
 
The meeting also saw differences of view among members on whether non-violation complaints should be applicable under the TRIPS Agreement, with the US and Switzerland pushing to end the moratorium to enable them to raise so-called "non-violation" disputes under TRIPS and challenge developing countries like India not allowing so-called "evergreening" of existing patents on pharmaceuticals.
 
A group of developing countries have presented a proposal (see below), asking the TRIPS Council to recommend that the Nairobi Ministerial Conference decide that such non-violation or situation complaints are inapplicable to disputes under TRIPS. (See below).
 
On the LDC issue, Bangladesh, on behalf of the LDCs, had introduced the LDC request under "other business" at a meeting of the TRIPS Council on 24 February, and the Council at that time had held a brief discussion on it.
 
At that February meeting, Bangladesh, on behalf of the LDCs, had submitted a duly-motivated request for an extension of the transitional period "for as long as the WTO Member remains a least developed country."
 
The request for the extension of the transitional period also covers test data protection under Article 30.3 of the TRIPS Agreement, as well as seeking exemption from the "mailbox" (Article 70.8) and exclusive marketing rights
(Article 70.9) provisions of the TRIPS Agreement (see SUNS #7970 dated 26 February 2015).
 
The LDC request had received wide support from health experts and civil society organisations. The request has also received support from UN agencies such as UNITAID, the UNDP and UNAIDS as well as members of the European Parliament and generic drug suppliers such as the IDA Foundation, a non-profit provider of generic drugs to low- and middle-income countries. (See SUNS #8027 dated 26 May 2015.)
 
The item on the request for an extension of the transitional period under Article 66.1 for Least Developed Country members with respect to pharmaceutical products and for waivers from the obligation of Articles 70.8 and 70.9 was added to the agenda of the TRIPS Council meeting at the request of Bangladesh on behalf of the LDCs.
 
At the TRIPS Council meeting itself, Uganda, the focal point for the LDC Group on this issue, took the floor and provided a detailed explanation of the LDC request and the need for the exemption.
 
According to one participant who attended the meeting, most of the developing countries supported the LDC request, while Norway, a developed country, also voiced support for the request. On the other hand, other countries said that they are still looking at the issue, and that they need more clarity with regard to the general waiver and the specific waiver, said the trade source.
 
According to other informed trade sources, the LDC request received support from South Africa, Nepal, Lesotho (on behalf of the African Group), Myanmar, Cambodia, Barbados (on behalf of the African, Caribbean and Pacific group of countries), Tanzania, India, Mali, Cuba, Brazil, Yemen, Togo, Argentina, Sierra Leone, China, Haiti, Democratic Republic of Congo, Uruguay, Rwanda, Chile, the Holy See and the World Health Organisation (WHO), as well as Norway.
 
The developed countries said that they are in the process of studying the LDC request. The European Union called for a more holistic approach, saying that some issues also need to be further clarified, such as the need for a sector-specific extension when there was already a general extension, said these sources.
 
The TRIPS Council Chair was requested to hold consultations on this matter, with the next Council meeting scheduled to take place in October.
 
PRESENTATION OF THE LDC REQUEST
 
In its presentation on the extension of the decision on pharmaceutical products at the TRIPS Council, the LDC Group cited a market access study undertaken by the WTO in 2014, which said that the LDCs' share in world merchandise trade in 2013 was at 1.24%, with a staggering deficit of US$60.6 billion. Its participation in world services exports was a paltry 0.68%.
 
According to the LDC Group, investment going to LDCs is not any different. It cited the 2013 UNCTAD Investment Report, which had found that inflows to the LDCs represented only 1.9% of global inflows.
 
According to the 2013 UNIDO Report, the share of manufacturing value added for LDCs actually declined from 2% in 1992 to 1% in 2012.
 
Many LDCs are now at a critical stage of development whereby population growth is high, and the socio-economic challenges are massive, said the LDCs, noting that 400 million of its people, i. e, 46% of the LDC population, live below the poverty line (USD1.25 a day). They disproportionately suffer health-risks associated with poverty such as malnutrition, unsafe water and poor sanitation.
 
The LDC Group said that its request is premised on Article 66.1 of the TRIPS Agreement, which states: "In view of the special needs and requirements of least-developed country Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3, 4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period."
 
As the LDCs have highlighted in their request, access to affordable pharmaceutical products is a prerequisite, to deal with the numerous public health challenges facing LDCs. LDCs are home to some of the world's most vulnerable people and bear considerable health burdens.
 
They face growing burdens of neglected, infectious, and chronic non-infectious diseases. Because of market failure in the patent-based innovation system, diseases that mainly affect poor people in lower-income countries - so-called neglected diseases, including Ebola - still do not have many treatment options.
 
In 2011, some 9.7 million of the 34 million people living with HIV worldwide, lived in LDCs, and 4.6 million were eligible for antiretroviral (ARV) treatment in accordance with the 2010 World Health Organization HIV treatment guidelines. However, only 2.5 million were receiving it.
 
LDCs also bear increasing health burdens of Non-Communicable Diseases (NCDs) than in higher income countries. According to a WHO Status Report of 2010, on non-communicable diseases, in the African Region, a region with many LDCs, the prevalence of NCDs is rising rapidly and is projected to cause almost three-quarters as many deaths as communicable, maternal, perinatal, and nutritional diseases by 2020, and to exceed them as the most common causes of death by 2030.
 
In the specific case of cancer, data from low-income countries suggests that cancer incidence is expected to rise by 82% from 2008 to 2030, whereas in high-income countries, incidence is expected to rise at a much lower rate of 40%, in part due to widespread access to vaccines and medicines.
 
The LDC Group said that upon submission of its request, it had engaged its partners in bilateral consultations, both developed and developing. The objective was to understand their concerns with the view to explaining the LDC request.
 
The LDC Group went on to address four of the issues that were raised, which seemed common to almost all the meetings that the Group had: (i) What is the relationship between the 2013 General transition period and the 2002 pharmaceutical decision; (ii) Whether or not, LDCs had utilized the pharmaceutical transition period afforded by Paragraph 7 of the Doha Declaration and as adopted by the TRIPS Council in 2002; (iii) the rationale behind the request for waivers from Articles 70.8 and 70.9; and (iv) the question of duration.
 
On the general transition period vis-a-vis the 2002 pharmaceutical decision, the LDC Group said that it is important to stress that the negotiations and the decision of the 2013 general transition period, did not give any special consideration to the matter of pharmaceutical products.
 
A specific decision on pharmaceutical products is critical to address the public health needs of LDCs. Unlike the 2013 extension, which is general, the 2002 pharmaceutical extension specifically mentions that "with respect to pharmaceutical products", LDCs do not have to "IMPLEMENT OR TO APPLY" patents or test data protection or "TO ENFORCE" such "rights".
 
The specificity and clarity of Paragraph 7 of the Doha mechanism and the 2002 pharmaceutical decision has provided LDC governments, donors and suppliers, the certainty to confidently supply and procure affordable generic medicines. Thus, it is without a doubt that a specific pharmaceutical decision is important to enable procurement of affordable generic medicines.
 
What the LDC Group is requesting of the TRIPS Council is merely a continuation of the Para 7 understanding in Doha. The 2013 decision does not preclude the need for a specific extension addressing the issue of pharmaceutical products.
 
On whether the 2002 specific pharmaceutical transition period has been valuable to LDCs, the LDC Group noted that the 2002 TRIPS Council Decision has been used extensively by LDCs and has been invaluable in assisting LDCs to access affordable pharmaceutical products. According to available information, following the adoption of the 2001 Doha Declaration, more than 20 LDCs have relied on Paragraph 7 of the Doha Declaration and the 2002 pharmaceutical decision, for the importation of generic medicines.
 
Several LDCs such as Sierra Leone, Djibouti and Zambia relied on the 2002 pharmaceutical decision and issued declarations with regard to non-enforcement of patents for certain medicines to facilitate importation, and to speed up the supply of the medicines. In addition, inspired by the 2002 pharmaceutical decision and with the aim to improve their health situation, several LDCs have excluded pharmaceutical products from the scope of patenting, for example, Uganda, Rwanda and Burundi.
 
According to the LDCs, it serves to show that Paragraph 7 of the Doha Declaration and the 2002 pharmaceutical decision have been effective and successful in promoting access to medicines and saving lives in LDCs. Civil society organizations from around the world have in their letter dated 5 June to WTO Members referred to the Paragraph 7 mechanism as "one of the most successful provisions of the Doha Declaration on TRIPS and Public Health".
 
On the waiver from exclusive marketing rights (EMRs) obligations under Article 70.9, the Group said that EMRs confer patent-like rights and is another form of monopoly. If LDCs are bound to grant EMRs, the value of a pharmaceutical transition period would be very limited, since access to medicines and other pharmaceutical products could be effectively blocked for at least five years.
 
According to the LDCs, the transition period would be redundant if its basic objective of enabling access to affordable generic medicines is curtailed. Therefore, following the 2002 pharmaceutical transition period, the WTO General Council in 2002 granted a waiver from obligations to grant Exclusive Marketing Rights.
 
If this obligation had not been waived, LDCs would have been required to recognize monopolies of patent applicants for pharmaceutical products for five years, delaying the introduction of generic medicines and thus limiting access to affordable medicines. There is need to renew this waiver along with the pharmaceutical transition period.
 
On the waiver from mailbox obligations under Article 70.8, the LDC Group said that the mailbox obligation requires LDCs not recognizing pharmaceutical patents at the time of entry into force of the WTO Agreement to create a system for receiving such patent applications to be examined at the end of the transition period.
 
The LDCs called for the mailbox obligation to be waived for the following reasons: The requirement to install patent filing systems, implies considerable financial and administrative efforts that will place additional burdens on vulnerable LDCs. Further, requiring LDCs to install mailbox when they don't even have to grant any patents (under the General extension), does not make sense. The mailbox obligation may also have a chilling effect on generic producers, who may be deterred from investing in generic production of pharmaceuticals, which could in future be patented.
 
On the issue of duration, the LDC Group said that it would be unconscionable for WTO Members to grant LDCs - the most vulnerable segment of countries - a time-limited transition period, requiring them to repeatedly seek extensions. A time-limited transition period creates an uncertain environment for the producers of affordable medicines, procurement agencies, donors as well as LDC governments that rely on the specific pharmaceutical transition period to produce and import affordable medicines.
 
This in turn jeopardizes the health situation of the people and communities within LDCs, with especially adverse consequences for the scaling up of HIV/AIDS treatment. LDCs cannot deal with increasing communicable and non-communicable disease burden without the assurance of continuous availability of generic medicines as long as they remain LDCs.
 
By granting a renewable transition period, Article 66.1 recognizes that for as long as a country remains an LDC, it will face various constraints, and will need an exemption from TRIPS obligations. Previously, a time-limited duration was given, and yet during this period, the socio-economic situation in LDCs has worsened and the health needs remain even greater.
 
As evidenced by their continuing LDC status, the LDCs still face unrelenting development and capacity challenges.
 
To address these pressing public health needs, to secure the ability to progressively realize the right to health, and to ensure their continuing right of access to more affordable medicines of assured quality, the LDCs called upon the Council to grant the extension of the transitional period under Article 66.1 of the TRIPS Agreement for Least Developed Countries with respect to Pharmaceutical Products, and for waivers from the obligation of Articles 70.8 and 70.9 for as long as the member is an LDC.
 
In its statement under this agenda item, India reiterated its support for the proposal of the LDCs contained in document IP/C/W/605 and requested all members to support the LDC proposal without any conditionalities. In 2001, recognizing the special circumstances of LDCs, WTO members granted LDCs a specific exemption for pharmaceutical products in paragraph 7 of the Doha Declaration on TRIPS and Public Health, which was later adopted as a TRIPS Council Decision contained in document IP/C/25 dated 27th June 2002.
 
This decision exempted LDCs from having to implement the provisions of the TRIPS Agreement relating to the protection of pharmaceutical patents and clinical data until 1 January 2016 in order to enable their access to low-cost generic medicines given the high prevalence of both communicable and non-communicable diseases in LDCs, like HIV/AIDS, malaria, cancer etc. The General Council also granted a waiver (WT/L/478 dated 12 July 2002) to LDCs from its obligations under 70.9 of the TRIPS agreement to grant exclusive marketing rights (EMRs).
 
According to India, the 2002 TRIPS Council decision (WT/C/25) supplemented by the General Council waiver (WT/L/478) has facilitated access to affordable medicines in LDCs. However, LDCs continue to bear high burdens of infectious and non-infectious diseases and face numerous challenges in confronting disease and illness. In June 2013, WTO members agreed to extend the transition period for LDCs to implement the overall TRIPS agreement until July 2021.
 
India reiterated Article 66.1 of the TRIPS which states "the Council for TRIPS shall, upon duly motivated request by a least developed country Member, accord extensions of this period." It said that it is of the view that the language used in Article 66.1 is mandatory in nature, in that it does not give the TRIPS Council any discretion to deny a request for extension of the transition period or to impose any further conditions on LDCs.
 
India noted that since July 2002, the two transition periods - one general and one specific to pharmaceutical products - are in force. It was of the view that a specific decision on pharmaceutical product transition period is absolutely critical to provide suppliers, procurers and donors of affordable medicines in LDCs the clarity and certainty to manufacture, export and import generic medicines. In addition, the LDC request for waivers from Articles 70.8 (mailbox obligation) and 70.9 (exclusive marketing rights) are fully warranted as these obligations create further obstacles to access to affordable pharmaceutical products to LDCs.
 
Importantly, said India, according to the June 2013 decision, the general extension was "without prejudice to the Council Decision of 2002" on the extension of the LDC transition period for "certain obligations with respect to pharmaceutical products" that expires in 2016 and to the right of LDCs to seek further extensions of the period provided for in Para 1 of Article 66 of the TRIPS Agreement.
 
In its statement, Nepal said that the extension of the transitional period for LDCs with respect to pharmaceutical products under article 66.1 is a very important issue for LDCs. "As we all know that still significant portion of the population in LDCs lives below the poverty line without having access to safe drinking water, nutritious food and primary health care facilities, making them highly vulnerable to many communicable and non-communicable diseases."
 
In addition, due to low income, these poor people cannot afford the high prices for medicines, including life saving drugs, which are under patent and are normally sold at high prices in the international market. Access to life saving generic medicines and other pharmaceutical products at an affordable price is a great challenge for many LDCs, but an essential component of the right to health and ensuring health services to poor and vulnerable communities.
 
Available data and survey reports prepared by different international organizations reveal that LDCs bear increasing health burdens of both infectious and non-infectious diseases and they have to increasingly confront several health risks. Indeed, LDCs are disproportionately exposed to several health risks associated with poverty, malnutrition, unawareness and poor sanitation.
 
According to Nepal, the specific pharmaceutical extension has been used extensively and successfully by many LDCs including Nepal. Several LDCs have authorized the importation of generic antiretroviral (ARVs) medicines to treat HIV/AIDS and other diseases relying on this decision. Considering the special needs and circumstances of LDCs, it urged members to sympathetically consider and grant the LDC request to tie up the extension of the pharmaceutical transition period to the point of LDC graduation. This is very much in line with Article 66.1 of the TRIPS Agreement.
 
Nepal said that the LDC Group request before the WTO TRIPS Council is an extremely modest request, considering the massive challenges LDCs have to face on a daily basis. It is seeking to continue with Paragraph 7 of the Doha Declaration on TRIPS and Public Health, a measure that has been successfully used by LDC governments and donors to facilitate access to affordable medicines in LDCs. For the LDC population it is a matter of life and death. Clearly a positive decision by this Council will go a long way in saving many lives in LDCs.
 
The World Health Organisation (WHO) said that the exemption from granting patents allows least developed countries to either locally produce or to import generic products even when those are still under patent in other countries. This can help countries in expanding health coverage by allowing the health sector to rely on more affordable generic suppliers. Ability to do competitive procurement, including from local or foreign manufacturers is in particular important in the area of HIV as well as for the new treatments for highly prevalent conditions like hepatitis.
 
The possibility not to grant patents on pharmaceuticals can also play a crucial role for LDCs to enhance local production of generic versions of essential medicines through strategic joint ventures. This can strengthen domestic manufacturing which can contribute to achieving public health objectives by ensuring security of supply as well as creating a knowledge economy.
 
Consequently, said WHO, the LDC group stated that the request aims at facilitating access to affordable medicines in LDCs and is motivated by the massive health challenges resulting from communicable and non-communicable diseases in LDCs, their socio-economic and financial constraints, as well as the lack of adequate technological base and local manufacturing capacities in the pharmaceutical sector.
 
WHO welcomed and supported the LDC request for extension as part of an overall effort to facilitate access to essential medicines in these countries and urged the Council for TRIPS to favourably consider this request.
 
The Holy See noted that in 2011, of the 34 million people living with HIV worldwide, some 9.7 million lived in LDCs. Of these, 4.6 million were in need of antiretroviral treatment (ART); however, only 2.5 million had received it. Up to one-half of those deprived of treatment were expected to die within 24 months. In the 49 countries designated as LDCs by the United Nations, non-communicable diseases as well are rising much faster than in higher income countries.
 
"We have before us a critical opportunity to help LDCs to reach health and sustainable development goals and the failure to do so could put millions of lives at risk. Access to adequate healthcare, including affordable medicines, remains a key challenge in most LDCs. The current flexible intellectual property arrangements for LDCs are a crucial tool for improving health."
 
In fact, said the Holy See, the flexibility agreed in TRIPS Article 66.1 has been accepted in recognition of the economic, financial, and administrative constraints preventing LDCs from immediate observance of all the obligations set out in the TRIPS Agreement. The general transition period may be useful in supporting the development of a strong chemical industry that could gradually move toward to production of API (Active Pharmaceutical Ingredient).
 
Long-term sustainability of the local pharmaceutical industry would require the development of the internal capacity to manufacture generic formulations thus reducing dependency and the high import costs for obtaining APIs. In particular, there is a need to develop a second line HIV treatment which, at present, is more than double the price of the first line regime. Moreover, the costs for a third line HIV treatment could be as much as 15 times the price of first line treatment. Clearly, in this context, the establishment of a pharmaceutical industry is particularly important.
 
The Holy See Delegation hoped that a sense of common responsibility, as shown in the decision adopted, "will bring us all to recommend to the General Council a waiver for LDCs from obligations under Articles 70.8 and 70.9 of TRIPS for as long as they remain LDCs."
 
TRIPS NON-VIOLATION AND SITUATION COMPLAINTS
 
On the TRIPS non-violation and situation disputes issue, informed trade sources said differences of view persisted among members on whether non-violation complaints should be applicable under the TRIPS Agreement.
 
Brazil, on behalf of a group of developing countries, presented a revision of a 2002 document (IP/C/W/385/ Rev. 1) on nullification or impairment disputes under the TRIPS Agreement, sought to be raised on what are known in GATT parlance as "non-violation and situation" complaints.
 
The paper was co-sponsored by Argentina, Bolivia, China, Colombia, Cuba, Ecuador, Egypt, India, Indonesia, Kenya, Malaysia, Pakistan, Peru, Russia, Sri Lanka and Venezuela.
 
The proponents of the paper said that like many WTO Members, they believe that the application of non-violation and situation complaints to the TRIPS Agreement raises fundamental concerns, which they summarized in detail in their paper.
 
They proposed that "... the Council for TRIPS recommend to the Ministerial Conference that complaints of the type provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 shall not apply to the settlement of disputes under the TRIPS Agreement."
 
According to one participant at the TRIPS Council meeting, the paper got a lot of support from all the developing countries, while most of the developed countries reiterated their existing positions. Other sources said the US and Switzerland were isolated in wanting an end to the moratorium.
 
According to other informed trade sources, Brazil said that the paper represented the common understanding among its co-sponsors that non-violation complaints are not necessary and are inconsistent with the balance of rights and obligations under the TRIPS Agreement, and as a whole in the WTO system itself.
 
The so-sponsors propose that the Council recommend to the Ministerial Conference (MC10 in Nairobi) that these complaints shall not apply to the settlement of disputes under the TRIPS Agreement.
 
A number of developing countries including the LDC Group, the ACP Group, and the African Group, as well as Norway and Canada among the developed spoke in support, said the trade sources.
 
The US and Switzerland continued to argue that consensus was needed to extend the period for non-application of non-violation complaints, these trade sources added.
 
The TRIPS Council Chair was asked to consult on this matter.
 
(A more detailed report including the situation on non-violation complaints under the old GATT 1947, as well as history of this provision in the TRIPS accord in the run-up to Marrakesh, resulting in the institution of the moratorium, will be in a forthcoming SUNS issue.) +