Least developed countries can now more easily obtain compulsory licences during public health emergencies, but some have been slow to take advantage. Vítor Palmela Fidalgo of Inventa International explains why.
After more than 11 long years, the amendment to the agreement on intellectual property rights eventually came into force. On 6 December 2005, the World Trade Organization (WTO) general council adopted the protocol amending the Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 31bis) and opened it for acceptance by the member states. The protocol provided additional flexibilities to grant special compulsory licences for the export of medicines, which was first established by a decision taken by members in 2003, known as the Declaration of Doha.
The problem was the well-known conflict between patents and public health. Entered into force in 1995, the TRIPS Agreement raised and standardised IP protection and enforcement for all members of the World Trade Organization (WTO).
This situation became a concern for the least developed countries, which would be forbidden to refuse pharmaceutical patent protection and to manage IP according their local policies. In confronting epidemic problems, such as HIV or malaria, it would be impossible for these countries to purchase and distribute patented drugs. So, the only way-out of this dilemma would be to adopt Article 31 of TRIPS, which provided for compulsory licences.
Following a profound discussion between developed and least developed countries, in 2001, the Doha Declaration was adopted, which affirmed the flexibility of TRIPS in circumventing patent rights so as to allow for easier access to medicines. Apart from stating that public health emergencies would be within the admissible grounds for compulsory licensing, the Doha Declaration went beyond and eventually admitted the use of compulsory licensing through exportation. Actually, despite providing for compulsory licensing in Article 31(f), TRIPS only allowed its use “predominantly for the supply of the domestic market of the member authorising such use”.
In this sense, due to the lack or absence of medicine manufacturing capacity of the least developed countries, this provision would result in a catch-22 situation for these countries, as although they were authorised to issue compulsory licensing for public health reasons, they were unable to make use of it due to the lack of manufacturing capacity. Following the Doha Declaration and a subsequent council decision, a permanent amendment to TRIPS was approved, thus creating the new Article 31bis. This article partly waives Article 31(f) for least developed countries, allowing them to issue compulsory licences for public health reasons through importing the drugs from other countries. The article also contains an open definition of “pharmaceutical products” and some formalities which should be complied with by importer and exporter countries in order to prevent fraud.
Despite having been enacted in 2005, this regime needed to be accepted by two-thirds of the members. After successive delays, this amendment eventually came into effect in January 2017. It is now time to understand how this amendment can be effective for the least developed countries, in particular, for the African countries that make up most of the jurisdictions in this category.
For the time being, this amendment has been ratified by 87 countries. However, among these countries, only 20 are from Africa, namely, Benin, Botswana, Burkina Faso, the Central African Republic, Egypt, Kenya, Lesotho, Mali, Mauritius, Morocco, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Tanzania, Togo, Uganda and Zambia. Furthermore, only Botswana, in Sections 31 and 32 of its Industrial Property Act, Act, provides a legal basis for this regime.
Even before its official incorporation into TRIPS, this legal regime had already been used in Africa. In 2007, Rwanda became the first country in the world to notify WTO of its intent to import products based on a compulsory licence. Canada was the ‘export’ country chosen to provide generic drugs to Rwanda. After tough negotiations but failed with the holders of the patents to obtain a contractual licence, pharmaceutical company Apotex was authorised by the Canadian government to produce a generic version of a drug to treat AIDS, which would cost approximately USD 0.20 per pill compared to its brand name equivalents, which cost USD 6. However, the process revealed itself to be very bureaucratic and cumbersome. The supply of the medication to Rwanda took more than a year to reach the country, despite the fact that Rwanda has received the entire order via two shipments in 2008 and 2009.
How African countries may benefit more from this legal regime is, for the time being, uncertain. First of all, it is unclear why only 20 African countries have ratified this amendment to TRIPS, since its provisions are specifically designed for the countries of this continent. The lack of internal legal amendments would be also a problem, seeing that, for some countries, Article 31bis of TRIPS is not self-executing, meaning it will not become effective immediately without the implementation of the necessary ancillary legislation in each country.
There are, in fact, alternative measures to cope with public health crises that can be taken instead of compulsory licences.
Parallel imports are an option. This measure involves the importation, without the consent of the patent holder, of a patented product that has a lower price in the exporting country. Although Article 6 of TRIPS provides that member states are free to implement or not the principle of international exhaustion of rights, the concept is normally forbidden or limited by national legislations.
Another option could be a differential pricing strategy. This strategy can ensure that prices in least developed countries are as low as possible, in comparison with most developed countries, which maintain the higher prices and so do not jeopardise the incentives for research and development. Notwithstanding, differential pricing is not an IP issue and, even when big pharmaceutical companies agree to adopt this measure in the poorest countries, the price is still unaffordable for them.
Compulsory licences are the main legal tool to address the problem of the prices of patented drugs and public health in Africa. However, much is still to be done. Firstly, political will on the part of some African governments is needed to accept the amendment to TRIPS and implement it in national legislation as soon as possible. Secondly, it is also necessary to change the way a compulsory licence is obtained through this process, since the red tape and complexity involved are not consistent with the emergency that is usually involved in these matters, such as epidemics. It would be necessary, for example, to waive the requirement that demands an attempt to obtain a voluntary licence from the patent holder and to simplify or avoid the numerous notifications required.