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TRIPS: DRUG PATENTS, TECHNICAL NOTE
Pharmaceutical patents and the TRIPS Agreement

The purpose of this note is to describe those provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) that relate to the standards of patent protection to be accorded to inventions in the area of pharmaceuticals.

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21 September 2006

See also:

> TRIPS issues: Pharmaceuticals and patents
Fact sheet: TRIPS and pharmaceutical patents (includes extracts of the TRIPS Agreement)

To set this discussion in context, it is useful to recall three basic features of the TRIPS Agreement:
  • that, together with some 25 other legal texts, it is an integral part of the Agreement Establishing the World Trade Organization (and therefore subject to the WTO dispute settlement system);
  • that it covers not only patents but all the other main areas of intellectual property rights; and
  • that it lays down not only the minimum substantive standards of protection that should be provided for in each of these areas of intellectual property, but also the procedures and remedies that should be available so that rights holders can enforce their rights effectively.

 
 
The basic balance in the TRIPS Agreement back to top

Finding a balance in the protection of intellectual property between the short-term interests in maximizing access and the long-term interests in promoting creativity and innovation is not always easy. Doing so at the international level is even more difficult than at the national level. Perhaps nowhere do these issues excite stronger feelings than in regard to pharmaceutical patents, where tension between the need to provide incentives for research and development into new drugs and the need to make existing drugs as available as possible can be acute.

The TRIPS Agreement attempts to find an appropriate balance. Its Article 7 entitled “Objectives” recognizes that the protection of intellectual property should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of users and producers of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligations. It is not an Agreement about simply maximizing the level of protection for intellectual property; rather, it emerged from a genuine negotiating process where the need for balance was very much to the fore.

 
 
What pharmaceutical inventions must be patentable under the TRIPS Agreement? back to top

The main rule relating to patentability is that patents shall be available for any invention, whether a product or process, in all fields of technology without discrimination, where those inventions meet the standard substantive criteria for patentability — namely, novelty, inventive step and industrial applicability. In addition, Members are required to make grant of a patent dependent on adequate disclosure of the invention and may require information on the best mode for carrying it out. Disclosure is a key part of the social contract that the grant of a patent constitutes since it makes publicly available important technical information which may be of use to others in advancing technology in the area, even during the patent term, and ensures that, after the expiry of the patent term, the invention truly falls into the public domain because others have the necessary information to carry it out.

Three types of exclusion to the above rule on patentable subject-matter are allowed. These may be of interest from a public health perspective:

  • inventions the prevention of whose commercial exploitation is necessary to protect ordre public or morality, including to protect animal or plant life or health;
  • diagnostic, therapeutic and surgical methods for the treatment of humans or animals; and
  • certain plant and animal inventions.

 
 
What are the rights conferred by a patent under the TRIPS Agreement? back to top

The minimum rights that must be conferred by a patent under the TRIPS Agreement follow closely those that were to be found in most patents laws, namely the right of the patent owner to prevent unauthorized persons from using the patented process and making, using, offering for sale, or importing the patented product or a product obtained directly by the patented process.



Term of protection back to top

Under the TRIPS Agreement, the available term of protection must expire no earlier than 20 years from the date of filing the patent application. It should be noted that, although the issue of patent term extension to compensate for regulatory delays in the marketing of new pharmaceutical products was raised in the Uruguay Round negotiations, the TRIPS Agreement does not contain an obligation to introduce such a system.(1)



Limitations/exceptions to these rights back to top

Under the TRIPS Agreement, patent rights are not absolute but can be subject to limitations or exceptions. These can be put into four categories:

  • the Agreement allows limited exceptions to be made by Members provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Thus, for example, many countries allow third parties to use a patented invention for research purposes where the aim is to understand more fully the invention as a basis for advancing science and technology. The WTO Panel in Canada — Patent Protection for Pharmaceutical Products decided that this provision, allowing limited exceptions, covered a provision of Canadian law which permits the use by generic producers of patented products, without authorization and prior to the expiry of the patent term, for the purposes of seeking regulatory approval from public health authorities for the marketing of their generic version as soon as the patent expires. (This provision is sometimes referred to as the “regulatory exception” or as a “Bolar” provision.) The Panel Report was adopted by the WTO Dispute Settlement Body on 7 April 2000;

  • the Agreement also allows Members to authorize use by third parties (compulsory licences) or for public non-commercial purposes (government use) without the authorization of the patent owner. Unlike what was sought by some countries in the negotiations, the grounds on which this can be done are not limited by the Agreement, but the Agreement contains a number of conditions that have to be met in order to safeguard the legitimate interests of the patent owner. Two of the main such conditions are that, as a general rule, an effort must first have been made to obtain a voluntary licence on reasonable commercial terms and conditions and that the remuneration paid to the right holder shall be adequate in the circumstances of each case, taking into account the economic value of the licence;

  • the Agreement recognizes the right of Members to take measures, consistent with its provisions, against anti-competitive practices and provides more flexible conditions for the grant of compulsory licences where a practice has been determined after due process of law to be anti-competitive. For example, the conditions referred to above for the grant of compulsory licences may be relaxed in these circumstances. The Agreement also provides for consultation and cooperation between Members in taking action against anti-competitive practices;

  • the TRIPS Agreement makes it clear that the practices of WTO Members in regard to the exhaustion of intellectual property rights (e.g. a Member’s decision to have a national exhaustion regime, under which right holders can take action against parallel imports, or an international exhaustion regime, under which they cannot) cannot be challenged under the WTO dispute settlement system, provided that they do not discriminate on the grounds of the nationality of right holders.



Other policy instruments back to top

Governments have a range of public policy measures outside the field of intellectual property to address issues of access to and prices of drugs. For example, many countries use price or reimbursement controls. Article 8 of the TRIPS Agreement makes it clear that WTO Members may, in formulating or amending their rules and regulations, adopt measures necessary to protect public health and nutrition, provided that such measures are consistent with the provisions of the Agreement.



Transition provisions back to top

The TRIPS Agreement lays down some transition provisions which gave WTO Members periods of time in order to adapt their legislation and practices to their TRIPS obligations. Those periods differ according to the type of obligation in question and the stage of development of the country concerned. With respect to those transition provisions which relate to the application of the obligations on substantive standards for the protection of pharmaceutical inventions, the obligations are mainly divided into two categories of countries:

(i) as the basic rule, developing countries had until 1 January 2000 to apply the provisions of the TRIPS Agreement, including the obligations regarding the protection of process and product patents. As regards product patents for pharmaceutical products, those developing countries which did not grant such protection on 1 January 2000 had an extra period until 1 January 2005 to introduce it. Since most developing country Members of the WTO already provided for product patent protection for pharmaceuticals, a relatively small number of countries were concerned(2);
  

(ii) least-developed countries originally had until 1 January 2006 to meet their TRIPS obligations. Pursuant to the instruction in the Doha Declaration on the TRIPS Agreement and Public Health, the Council for TRIPS has extended this deadline until 1 January 2016 (Decision of 27 June 2002.

In both cases, the rules of the TRIPS Agreement apply or will apply not only to new patent applications but also to patents still under protection at the end of the respective transition periods.

Notwithstanding proposals to the contrary, the TRIPS Agreement did not require the bringing under protection of pharmaceutical inventions that were in the “pipeline” in these countries at the time of entry into force of the WTO.(3) However, with effect from that date (1 January 1995), those developing and least-developed countries that did not already make available patent protection for pharmaceutical products, have been under an obligation to provide a system whereby applications for patents for pharmaceutical product inventions can be filed (often referred to as a “mailbox” system). These applications did not have to be examined until after 1 January 2005 in the case of developing countries, and they do not have to be examined before 1 January 2016 in the case of least developed countries. If found to be patentable by reference to their filing (or priority) date, a patent would have to be granted for the remainder of the patent term counted from the date of filing.

In the event that a pharmaceutical product that was the subject of a “mailbox” application obtained marketing approval prior to the decision on the grant of a patent, an exclusive marketing right of up to five years had to be granted provided that certain conditions were met. The General Council has waived this obligation for least developed country Members until 1 January 2016 (Decision of 8 July 2002).



Concluding remarks back to top

Most developing and least developed countries already granted patent protection for pharmaceutical products prior to the entry into force of the TRIPS Agreement. In these countries, the TRIPS Agreement therefore did not lead to fundamental changes in this regard, although a certain amount of adjustment in legislation, for example in respect of patent term and compulsory licencing, was often necessary. With respect to the countries that did not provide patent protection for pharmaceutical products at the time of entry into force of the WTO Agreement, some, including Brazil and Argentina, decided to bring such protection into effect more quickly than is required under the TRIPS Agreement.

The TRIPS Agreement pays considerable attention to the need to find an appropriate balance between the interests of rights holders and users. This was an important theme in its negotiation. This is not only reflected in the basic underlying balance related to disclosure and providing an incentive for R&D, but also in the limitations and exceptions to rights that are permitted and in the transition provisions. The flexibilities in the TRIPS Agreement have subsequently been clarified and reinforced by the Doha Declaration on the TRIPS Agreement and Public Health, as well as by the Waiver Decision of August 2003 and the Amendment Decision of December 2005 to facilitate compulsory licenses for export to needful countries.

It should also be appreciated that the protection of pharmaceutical inventions was one aspect of a much wider agreement, covering not only the protection of intellectual property in general in a coherent and non-discriminatory way but also further liberalization and strengthening of the multilateral trading system as a whole. While it is true that some countries put particular emphasis on TRIPS matters in the Uruguay Round negotiations, it is also true that other countries attached great importance to other areas, for example textiles and agriculture. It is a belief shared by all WTO Members that a strong and vibrant multilateral trading system is essential for creating conditions for economic growth and development worldwide. This in turn provides for the generation of the resources required to tackle health problems.

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Footnotes:

(1) The effective period of patent protection for inventions of new chemical entities is much less than the full 20 years, because a large part of that period will have expired before marketing approval is obtained from the public health regulatory bodies. For this reason, most of the major developed countries have introduced systems whereby a prolonged period of protection can be obtained to compensate, at least in part, for this loss of the effective period of protection.

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(2) Thirteen WTO Members (Argentina, Brazil, Cuba, Egypt, India, Kuwait, Morocco, Pakistan, Paraguay, Tunisia, Turkey, United Arab Emirates and Uruguay) have notified “mailbox” systems to the TRIPS Council, thus indicating that they did not grant patent protection to pharmaceutical products. Some of them, such as Argentina, Brazil and Turkey, have since introduced such protection. (It cannot be excluded that there were a few other WTO Members who should have notified but did not done so).

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(3) The “pipeline” refers to the backlog of inventions of new pharmaceutical products that were no longer patentable on that date, because disclosed, but not yet on the market because pending marketing approval.

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