1. What are the TRIPS flexibilities? How can their incorporation in patent legislation promote access to essential medicines? 25 November 2014, Maseru, Lesotho Katie Kirk, Consultant, HIV, Health and Development Practice, UNDP

2. What is a patent? A type of intellectual property Social contract between inventor and society Gives the inventor the temporary and exclusive right to make, use, export or market an invention in the country where the invention is patented. Is territorial (national)

3. How do patents affect access? 2 ways: – 1 st is by creating protections on existing drugs, which give patent holders exclusive control to licence, manufacture and distribute their product. – 2 nd is by influencing the kind of innovation which is undertaken in the first place.

4. Non patent factors Recognize other factors, like: – Slow registration of medicines – Inefficiencies in procurement and budgeting – The presence or absence of a viable generics industry – Human resources contraints – Wider health system capacity But, IP is also a key determinant

5. IP prior to TRIPS First US patent law barred foreigners from filing patents 1790-1836 Before the TRIPS Agreement, up to 50 countries did not grant patents for pharmaceutical products. Many developed countries only granted pharmaceutical patents after their industries developed e.g. Switzerland 1977, Italy 1978 (5 th largest pharmaceutical producer), Spain in 1986 (entry into force in 1992) Brazil & India changed colonial laws to exclude pharmaceutical products from being patented, allowing local companies to reverse engineer, produce cheaper medicines.

6. TRIPS Agreement Objectives (Article 7) “The protection and enforcement of IPRs should contribute to the promotion of technological innovation and to the transfer and dissemination of technology knowledge and in a manner conducive to social and economic welfare, and to balance of rights and obligations” Sole aim is not to protect IP Balance between rights and obligations depending on country’s circumstances

7. TRIPS Agreement Principles (Article 8) 1. “Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this agreement 2. “Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of IPRS by the right holders…” Granting of IPRs is the conferring of a monopoly which can be abused

8. Minimum standards imposed by TRIPS TRIPS prescribes minimum standards for IP protection & enforcement TRIPS Agreement regulates copyrights and related rights, trademarks, geographical indications, industrial designs, patents, layout-designs (topographies) of integrated circuits and protection of undisclosed information Article 33 requires WTO Members to provide a 20 year minimum period of patent protection. TRIPS contains exceptions to patent rights and flexibilities for use by countries to reduce medicine prices e.g. compulsory licensing

9. Doha Declaration on TRIPS and Public Health Doha Declaration adopted at WTO meeting in November 2001 Clarified that developing countries can use TRIPS Flexibilities to increase access to medicines Paragraph 4:We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health Paragraph 5: We recognize that Members have the right to grant compulsory licenses and freedom to determine the grounds for compulsory licenses Paragraph 7: Least Developed Countries do not have to grant patents on medicines until 2016 which allows them to import generics from cheapest international source

10. The TRIPS Flexibilities at a Glance

11. TRIPS transition periods Article 66 of the TRIPS Agreement – Initial period for compliance was 1996 – But 2 extensions granted: i)For pharmaceutical patents until 2016 ii)For all IP until 2021 What about after 2021?

12. Patentability criteria Article 27(1) of TRIPS: (…) patents shall be available for any inventions whether processes or products in all fields of technology provided that they are new, involve an inventive step and are capable of industrial application. Free to define ‘new’, ‘inventive step’ and ‘industrial applicability’ One of the most important flexibilities: → what is an invention for the purpose of protection?

13. Patentability criteria, continued India’s Section 3(d) What are not inventions – “mere discovery of a new form of a new substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus, unless such known process results in a new product or at least one new reactant”.

14. The role of patent offices The patent office should function as a steward of the public interest, not as a servant of patent applicants. The PTO must protect the public against the issuance of invalid patents that add unnecessary costs and may confer market power… Federal Trade Commission (2003), To promote innovation: the proper balance of competition and patent law policy, available at htpp://www.ftc.gov, p. 14.

15. Patent opposition US Federal Trade Commission: 30% of patent infringement cases that are fully litigated patent issued was invalid In India in one year: 72% oppositions were upheld. Patent opposition may take place – Before granting when application is published – Shortly after patent is granted (or both) TRIPS does not regulate patent opposition

16. Concept of exhaustion TRIPS does not address the issue of the exhaustion of intellectual property rights. → → → hence, up to countries to decide. 3 options for exhaustion: - national - regional - international Important to SADC efforts around pooled procurement and Pharmaceutical Business Plan

17. Parallel Importation Article 6 TRIPS “For the purposes of dispute settlement under this Agreement … nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights” Entitles countries to import patented product from any other WTO Member state where product is under patent for cheaper price. No need obtain consent of patent holder. Doha Declaration on TRIPS and Public Health affirms the right to choose Exhaustion of rights: national, regional or international regimes Recommendation: International exhaustion

18. Government use/Compulsory Licenses Article 31 Granting of licence to government or 3 rd party to use (to import of manufacture) a product under patent without consent of patent holder WTO Members retain the right to determine grounds for compulsory licence (reaffirmed in Doha Declaration on TRIPS and Public Health) Typical grounds for granting compulsory license include : - where it is in the public interest, - to grow a domestic manufacturing industry - national emergencies or situation of extreme urgency, - to remedy shortages around public health nutrition, - failure to exploit or insufficiency of working - to remedy anti competitive practices by patent holders

19. TRIPS Conditions for grant of CL To obtain compulsory license, need to show that prior negotiation for reasonable terms from the patent holder failed. Except when CL issued in cases of: -Situations of extreme urgency including public health crisis -For public non-commercial use (government use orders) -Remedy anti-competitive practices CL should be accompanied by payment of “adequate remuneration” for patent holder, Article 31(h) CL has to be predominantly for the supply of the domestic market, Article 31(f)

20. Government use orders Government utilization of compulsory licenses – "Public non-commercial use” Government (agency, department or government contractor) to use patent in the public interest without the consent of the patent holder – Should be informed as soon as practically possible. Payment of “Adequate Remuneration” to patent holder

21. Suggestions for CL and government use provisions Should be quick and easy to use Beware of providing legal recourse that may lead to delay in issuing license e.g. by allowing suspension of license until legal challenges have been heard One can provide for patent holder to be compensated in the event compulsory license is revoked Disputes such as amount of royalty or duration of license should not delay CL Should allow interested parties to apply for license (including generic companies)

22. Cost savings of medicines in Thailand in 2007-2012 (Source: Ministry of Public Health and the National Health Security Office 2007) http://www.hitap.net/backoffice/project/pdf_projects/2009-05-20_Final%20report%20-06-301-2551.pdf http://www.hitap.net/backoffice/project/pdf_projects/2009-05-20_Final%20report%20-06-301-2551.pdf DrugUses Patent holder in Thailand Estimated # of patients requiring Treatment (per year 2007 Estimate) Cost Savings through government use licenses (million USD) 2007-2012 Efavirenz First-line ARV (alternative to nevirapine-based regimens) Merck Sharp and Dohme 200,000113.4 Lopinavir + Ritonavir Second-line treatment for HIV/AIDS Abbott Laboratories Limited 50,00076.8 Clopidogrel Prophylaxis of coronary artery obstruction Sanofi-Aventis Limited 300,00021.5 Docetaxel Treatment of breast, lung, prostate and stomach (GIST) cancers Sanofi-Aventis Limited 1,500-2,00047.6 Letrozole Tre canceratment of breast Novartis4,90091.8 ErlotinibTreatment of lung cancerRoche4,6006.7

23. India compulsory licensing example In early 2012, the Indian Patent Office approved the country's first compulsory license on Nexavar – on the basis that it was unaffordable and had not been made available in sufficient quantities in the country. – challenged, but in March 2013, the Intellectual Property Appellate Board rejected its petition. – Lead to a 97 per cent price reduction for the drug and a 76 per cent reduction in price for a competitor drug

24. General exceptions to patent rights Article 30 “Members may provide limited exceptions to the exclusive rights conferred by a patent, 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 Examples include: Research, Experimental use for scientific or commercial purposes Early Working/Bolar" exception: use of patent prior to expiry of the patent period for approval for generic products Teaching/Education Exception Prior Use Individual Prescriptions

25. ‘TRIPS-Plus’ measures Levels of intellectual property protection that go beyond the minimum standards required by the TRIPS Agreement. Often found in FTAs. Includes: – Limiting the grounds and conditions for CL; – Patent term extensions – Patent linkage; – Data protection/exclusivity – Require loosening of patent threshold requirements – Restricting parallel imports

26. Conclusion All the flexibilities suggested here are within the rights of Member countries under TRIPS. Countries should – Incorporate and use all public health flexibilities – Avoid incorporation of TRIPS Plus measures.

27. Thank you Katie Kirk, Consultant, HIV, Health and Development Practice, UNDP catherine.kirk@undp.org