The TRIPs Amendment: Developments and implications Tralac/ Comomonwealth post Hong Kong Conference 10 April 2006 Tenu Avafia UNDP

Outline Context Historical Developments Doha Declaration 30 August Agreement Article 31 Amendment Implications of Article 31 Amendment Opportunities and Challenges for African Countries Conclusion

Public health situation in sub-Saharan Africa Sub-Saharan Africa has 10% of world’s population but is home to 60% of all cases of HIV/AIDS South Africa alone has 5.3 million people living with HIV/AIDS, more than North, South America, West- Indies, Western,& Central Europe, Australia combined Swaziland went from 4% infection rate in 1992 to 38.8% in 2004 Life expectancy dropped in southern Africa by 29 years on average because of HIV/AIDS Other pandemics e.g. malaria and tuberculosis still rampant Of the estimated malaria deaths that occur yearly in the world, 90% are in Africa, mostly children

Developing country views of TRIPs TRIPs initially included under WTO mandate to prevent trading in counterfeit goods TRIPs only 11 years old TRIPs attempts to balance the rights of innovators and consumers Minimum standards but with exceptions e.g. LDCs Developing countries still coming to terms with TRIPs implementation Not aware of far reaching implications of TRIPs during Uruguay round negotiations Most developed countries did not implement pharmaceutical patents until industries were developed Patent rights were often ignored for technological advances e.g. Wright brothers

Flexibilities available in the TRIPs agreement Compulsory licensing Government use orders Parallel importation 30 August Agreement (importation of generics produced under compulsory license) Early working or Bolar provision (Canada-EU WTO dispute) Experimental use exception Exclusion from patentability under Article 27 Competition law and policy to regulate prices

Doha Declaration on TRIPs and Public Health Before Doha Declaration, every attempt to use TRIPs flexibility opposed by patent holding drug companies PMA v President of South Africa; US- Brazil WTO dispute Doha Declaration adopted in Qatar Ministerial meeting, November 2001 TRIPs "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, to promote access to medicines for all. ” Officially allowed compulsory licensing Useful for countries with manufacturing or assembling industries e.g. India, China, Brazil What if countries had no or insufficient manufacturing capacity? (paragraph 6 issue)

30 August 2003 Agreement Doha Declaration on TRIPs was not useful to most countries in Africa as they do not have any or sufficient manufacturing capacity TRIPs Council was tasked with providing an expedited solution to paragraph 6 issue Several missed deadlines negotiations stalled over scope of diseases and geographical limitations 30 August 2003 Agreement allowed the importation/exportation of generics produced under CL 30 August Agreement remains officially untested, there are claims that it is unworkable Labeled by some as a “gift bound in red tape”

30 August 2003 Agreement Requirements for the successful use of 30 August mechanism include: i) Assessment by importing country of precise number of essential medicines required ii) Compulsory licenses must issued by importing and exporting countries of they are not LDCs iii) Notification of WTO Secretariat iv) Mechanism to prevent the re-exportation of imported medicines (eg specific labeling which raises costs) v) Process must be repeated for each drug Mechanism was criticised as being unfeasible for countries with capacity constraints and unplanned projections for treatment How effective would it be for avian flu for instance? Despite criticisms, 30 August has allowed countries to negotiate lower prices with brand name companies

Permanent Amendment to Article 31 of TRIPs 30 August 2003 Agreement was temporary waiver of Article 31(f) Negotiations commenced to permanently amend Article 31 (1 st time in WTO history) Africa Group argued that paragraph 11 of 30 August Agreement allowed for negotiations on text of 30 August Developed countries argued that 30 August was to be adopted with Chairman’s statement Chairman’s statement contained additional conditions which made 30 August even more burdensome Agreement reached in December 2005 before Hong Kong Chairman’s statement was again read out during Article 31 amendment agreement Legal validity of statement remains unclear

The Emergence of Bilateral Trading Agreements: implications for utilization of TRIPs flexibilities Escalation of bilateral trading activity after failed WTO rounds in Seattle and Cancun African countries are negotiating FTAs with potential ‘TRIPs plus’ impact with: i) USA i) USA ii) EPA negotiations with the EU SACU insisting on FTA negotiations without IP provisions US has insisted this is outside their negotiating mandate AGOA a factor in negotiations stalling?

Bilateral Trading Agreements: implications for utilization of TRIPs flexibilities IP chapters involving the US have included the following TRIPs plus provisions: IP chapters involving the US have included the following TRIPs plus provisions: extension of 20 year patent period extension of 20 year patent period requiring Drug Regulatory Authorities to conduct patent searches instead of Registrar of patents requiring Drug Regulatory Authorities to conduct patent searches instead of Registrar of patents restriction of parallel importation restriction of parallel importation limiting the use of test data limiting the use of test data

The use of TRIPs flexibilities by African countries to date Zimbabwe issued compulsory license in ’03, Zambia in ’04 and Mozambique in ’04 South African activists used competition law flexibilities to reduce prices South African companies since have been able to negotiate voluntary licenses Voluntary licenses granted in Kenya after amendment of Industrial Property Act

What a more comprehensive legal framework could contain Various pieces of legislation and policies play a role in achieving comprehensive legal framework Patents; medicines and competition legislation all could be used for TRIPs flexibilities The importance of effective legislation in conducting voluntary negotiations is evident e.g. Brazil for some years Use of competition law as a tool in reducing prices underutilised Provisions sensitive to income disparity of people (e.g. royalty provisions) Competition law can provide alternative to complexities of Article 31(f) & 30 August Agreement A provision which allows the issuing of a compulsory license on the basis of unfair competition -in line with Art 31(k) of TRIPs

Conclusion The same administrative difficulties that accompanied 30 August Agreement are in the permanent solution Remains un-used Negotiations regarded as closed by WTO and developed countries Will have to be officially confirmed in December 2007 by 2/3rds of WTO members Developing countries had not made legislative changes because of interim nature of 30 August 3003 decision Many countries will have to make those changes now It is imperative that a country attempts to use the mechanism before December 2007 There are other flexibilities available under TRIPs Can LDCs amend laws to invalidate patents?

Conclusion continued… As first line treatment regimens become less used, TRIPs flexibilities will become necessary Legislation and policies must take into consideration developmental needs of specific countries Legislative reform should ensure that TRIPs flexibilities are maximized Cross-cutting legislative and policy response is important Any legislative and policy reform should bear in mind international developments (e.g. WIPO development agenda) No one size fits all, policies will have to be country specific e.g. south Africa and Lesotho have different IP legislative interests