Par.6. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council reviews the so-called Paragraph 6 system annually, but for the first time since the system was agreed in 2003, a whole day was set aside for WTO members to discuss this agenda item in a more structured way, the length of the debate on this and other topics taking the meeting late into the evening of 27 October.

The “Par.6” system (nicknamed after the sixth paragraph of the Doha Declaration on TRIPS and Health) was designed to tackle a specific legal issue, unblocking a provision of the TRIPS Agreement that prevented governments from licensing the production of generic versions of patented drugs exclusively for export to countries unable to make the medicines.

The World Health Organization (WHO), an observer in the TRIPS Council, added a new angle to the on-going debate about whether the fact that the system has been used only once shows that it is too cumbersome.

The WHO said that the “Par.6” system will become more important as newer HIV/AIDS medicines are needed in the future. Prices of “first line” treatments have fallen drastically because of competition from generics (with suppliers such as India not having patent protection until 2005), allowing a 12-fold increase in poor patients receiving treatment. However, since India had introduced full patent protection in the pharmaceutical sector in 2005, newer treatments for HIV/AIDS, tuberculosis and cancer may need the system in the future to increase competition from generics, the WHO said. (More below.)

Enforcement. The discussion on enforcement echoed the debate in the previous meeting in June, this time with the focus on the latest version of the draft Anti-Counterfeiting Trade Agreement (ACTA), which some WTO members are negotiating amongst themselves and is said to be near completion after 11 rounds of negotiation.

Critics said ACTA threatens the negotiated balance of the TRIPS Agreement and could lead to countries put under pressure to adopt standards that are stricter than TRIPS (“TRIPS-plus”) against their interests. They argue that the negotiation is untransparent and undermines multilateralism.

ACTA participants said that their negotiations do not affect or undermine rights and obligations under TRIPS and that clearer standards are needed to tackle the real dangers arising from counterfeit products such as medicines and spare parts; they point to public interest safeguards built into the negotiating text.

Biodiversity. The discussion on biopiracy and related issues included a proposal for the Secretariat of the Convention on Biological Diversity to brief the TRIPS Council on the CBD negotiations on access and benefit sharing which were concluded that same week in Nagoya, Japan. There was no consensus on this. (More below.)

Technical assistance. The specific needs and interests of least developed countries (LDCs) were given particular attention, with a review of measures to promote more tailored technical assistance, incentives for technology transfer, and least developed countries’ priority needs to implement TRIPS, with Rwanda and Tanzania the latest to supply their assessments.

Non-violation. The TRIPS Council also discussed briefly “non-violation” cases, where positions remain unchanged. The present “moratorium” (ie, the agreement not to bring TRIPS non-violation cases to the formal WTO dispute settlement procedure) has been extended from one ministerial conference to the next. The focus is now on what to do at the next conference in 2011, which the General Council recently agreed will be on 15-17 December 2011 in Geneva.

 

Some detail

TRIPS and public health: the Par.6 system and the annual review

See explanation

Background: The 2003 “waiver” (and the 2005 pending TRIPS amendment) removes a requirement that generics produced under compulsory licence should be mainly for the domestic market. This constrained exporting to countries that could not make the medicines, because the major (or “predominant”) part of production had to go to the domestic market — only what was left could be exported. A compulsory licence exclusively for export was not possible. The new system is sometimes called the “Paragraph 6” system after the provision in the 2001 Doha Declaration on TRIPS and Public Health that led to its creation.

The TRIPS Council reviews how well the system is working every year, a requirement for any waiver under Art.IX.4 (9.4) of the WTO Agreement. This usually takes place in October, but so far with little depth or detail. Members sought a more structured and detailed review for 2010 and therefore the whole day of 27 October was allocated for this agenda item.

Chairperson Martin Glass organized the discussion into topics to give it more focus, and encouraged members to report in detail on their national experiences. The topics covered actual experiences in using the system and any obstacles confronted, various legal aspects such as any domestic legislation needed and the international treaty process of accepting the TRIPS Agreement amendment, capacity building, alternative ways of achieving access to medicines, and what to do next.
  

The debate

Some developing countries continued to argue that the “Par.6” system must be too cumbersome since it has only been used once.

India said an application for compulsory licences under its Patent Act for three medicines to be exported to Nepal was withdrawn in an early stage. It said the Indian generics manufacturer concerned withdrew the request because the potential importing country had not granted a compulsory license to import the medicines, nor had it notified the TRIPS Council of its intention to do so.

This, India said, shows that the system’s notification requirements and built-in safeguards are too costly and burdensome and represent a disincentive for the generic supplier to produce.

Some developed countries said detailed information supplied by Canada shows that the system is not too cumbersome. They questioned whether attempts to use the system that were subsequently withdrawn were because of the system itself or because of other reasons such as prices and competition from alternative suppliers.

They asked India for details of what exactly the Indian company found to be too burdensome. They complained that too little information had been provided on what exactly might be the problems with the system other than the fact that it had only been used once, and that potential importing countries had not described their experiences.

They argued that success should not be measured by the use of this one tool, but the full range of issues affecting access to medicines — including health infrastructure, taxes and import duties — and the array of measures available to governments — such as new bulk procurement methods. The fact that there are alternative ways of making medicines affordable should not be taken as evidence that the “Par.6” system is a failure, Australia said.

Some countries did not express a view either way. They simply asked questions about operational details such as royalty payments (Canada and Switzerland include the importing country’s level of development in the formula) and how the medicine’s efficacy and safety would be ensured when exporting countries use the system.

Chairperson Martin Glass described the review as a useful exchange of information. He will consult members on what to do next. As an annual review, the subject will be on the council’s agenda again in October 2011. Some members would like a follow-up session in the next meeting in March 2011.

Some, particularly developing countries, also want a workshop that would allow pharmaceutical companies, non-governmental organizations and others to participate. These countries argue that some questions could not be answered in this review because companies and NGOs were not present. Some other countries questioned whether members have discussed the issue enough under their own responsibility to justify a workshop with other participants.

Members’ experience
Canada is the only country that has used the system as an exporter (with Rwanda as the importer). In this meeting, Canada added considerable detail to the information it supplied previously.

It described its <Access to Medicines Regime (CAMR), which came into force in May 2005 and repeated its assessment that CAMR was not the main cause of the length of time taken for the medicine (Apotex’s generic Apo-TriAvir) to be approved for production and exported under the system to Rwanda in 2008 and 2009.

Among the reasons were the fact that Apotex did not have a buyer when it first sought approval for its generic in 2006 and the procurement tender in Rwanda after the compulsory licence had been issued in September 2007. (Rwanda did not contribute to the session.)

Canada said that the generic medicine was approved by Health Canada in less than six months through a special review stream established by the Health Ministry in order to speed up approval e approval process, instead of the usual time of up to a year. The compulsory licence itself was approved in only 15 days in September 2007, Canada said.

The requirement to negotiate a voluntary licence with the patent holders first (GlaxoSmithKline, Boehringer Ingelheim and Shire BioChem Inc) was handled swiftly and the three waived the royalty payment that was eventually offered to them, Canada went on. It added that Apotex eventually secured the deal to sell to Rwanda in the face of competition from other generics suppliers in an open tender by selling at below cost (19 cents per pill).

Canada rejected some members’ arguments that anti-diversion conditions (preventing the medicines going to the wrong markets) are burdensome since the colouring and labelling requirements and the need to publish information on a website are simple.

India’s contribution included an account of an Indian company seeking compulsory licences to export to Nepal in September 2007. The request was dropped after the Indian company claimed that the importing country had found the conditions for using the system too onerous to proceed, India said.

 

WHO
The World Health Organization listed four factors affecting access to medicines:

• rational selection of medicines, for example via the WHO model list of essential medicines


• affordable prices


• sustainable financing: “per capita expenditure on medicines in real terms remains regrettably very low in poor countries,” the WHO said.
•  
reliable medicine supply systems: forecasting needs, procurement, storage, transportation, inventory and storage, which WHO said “will remain a formidable challenge”.

On prices, the WHO noted that 90% of medicines on its list of essential medicines are not under patent protection but a majority of patients in low income countries cannot acquire them because of lack of supply of generics.

It said competition from generics has slashed prices of “first line antiretroviral medicines” from over US$10,000 per patient per year in 2002 to $100 in 2010. The “Par.6” system will become more important when newer medicines are needed, and should be used “once it becomes clear that no other possibility exists” for acquiring the medicines at affordable prices, the WHO said.

Legal issues
The WTO Secretariat explained the legal difference between countries introducing laws to implement the system and their notifying the WTO that they have accepted the amendment. The two are separate and do not depend on each other. (Canada developed its CAMR in 2005, to implement the 2003 WTO waiver, before the amendment was agreed; some countries have accepted the amendment before or without introducing implementing legislation.)

Acceptance: Under international treaty law, countries have to formally state that they agree to be bound by a treaty, in this case the amended TRIPS Agreement, which will take effect when two thirds of the WTO’s membership has accepted the amendment. The list of acceptances is here. Since the last meeting, Uganda and Mongolia have accepted it.

When a country accepts the amendment, it effectively affirms that it accepts an additional flexibility in the TRIPS agreement, and that other countries have the legal right to use the system if they choose to do so. Accepting the amendment does not mean that the country necessarily wants to use the system itself. Nor does it mean the country has to implement the system through its own laws or regulations.

Implementing law: These are changes to allow the system to be used by the country either as an importer or exporter or both under their own laws or regulations. Countries that have formally notified changes to their domestic laws or regulations: Norway (to export), Canada (to export), India (to export), the EU (to export), Hong Kong China (to export, and to import in extreme urgency), Switzerland (to export), the Philippines (to import and export), Singapore (to import in extreme urgency), Albania (to export) and Croatia (to export).
  

The ‘triplets’: Article 27.3(b), biodiversity and traditional knowledge

See explanation

New in this debate was a call from India and a number of other countries for the Secretariat of the Convention on Biological Diversity (CBD) to be invited to brief the next TRIPS Council meeting (in March) about the negotiations on a CBD protocol on access and benefit sharing that were concluded in Nagoya, Japan at the same time as this TRIPS Council meeting. The US opposed on the grounds that the CBD is not an observer in the TRIPS Council — the US also opposes making the CBD a TRIPS Council observer.

Apart from that, the discussion largely echoed the debate in the June meeting, with the focus again on two related issues: the “disclosure proposal” (explained via the link above) and a proposal from Bolivia that would include a ban on patenting all life forms IP/C/W/545.

Members broadly agree on the need to avoid “biopiracy” and “bad” patents that do not meet accepted standards. They also agree that the principles of “access and benefit sharing” (ABS) and “prior informed consent” (PIC) should be applied to intellectual property protection for inventions involving genetic material or traditional knowledge or both. They disagree on how to achieve this.

Speaking in favour of “disclosure” this time were: China, India, Cuba, Ecuador, least-developed countries (Angola speaking), Colombia, Indonesia, Peru, Uruguay, South Africa, Brazil, Egypt, the African Group (Nigeria speaking), Switzerland, the EU, Norway (which has its own version). Several called for Director-General Pascal Lamy to continue his consultations.

Speaking against were: Israel, Canada, Japan, Australia, Argentina, Repupblic of Korea, New Zealand, and the US.

Some countries either specifically opposed Bolivia’s proposal for a ban on patenting all life forms or described provisions in their laws allowing patenting for some types of life forms (such as micro-organisms) or for biotechnology in general. They included: India, Brazil, Canada, Switzerland, Japan, Norway, Rep.Korea, and Chinese Taipei.

Article 27.3(b) deals with patentability or non-patentability of plant and animal inventions, and the protection of plant varieties. Broadly speaking, it allows governments to exclude some kinds of inventions from patenting, i.e. plants, animals and “essentially” biological processes (but micro-organisms, and non-biological and microbiological processes have to be eligible for patents). However, plant varieties have to be eligible for protection either through patent protection or a system created specifically for the purpose (“sui generis”), or a combination of the two.

In other words, Art.27.3(b) offers countries the choice of whether to protect or not in some circumstances, and requires them to provide protection of some kind in others. Bolivia’s proposed ban, first presented in March, would turn that around.

  

Chairperson: Mr Martin Glass of Hong Kong, China.

 

Next meetings

TRIPS COUNCIL (REGULAR) MEETINGS (could change):

• Tuesday-Wednesday 1—2 March 2011
• Tuesday-Wednesday 7—8 June 2011
• Tuesday-Wednesday 25—26 October 2011