LDC Pharma Extension Request At WTO Yields Support But Needs Further Discussion 11/06/2015 by Catherine Saez, Intellectual Property Watch 2 Comments Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)World Trade Organization members this week could not decide on a request from least-developed countries to extend a waiver allowing them to forego the enforcement of intellectual property rights on pharmaceutical products until their economies are stronger. Discussions are expected to be conducted informally until the next meeting of the organisation’s council on IP rights in October. Also unresolved is whether or not intellectual property rights can be subjected to complaints at the WTO dispute settlement body when no WTO agreements have been breached in what is called non-violation complaints. All but two members agree that those complaints should not be allowed under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). WTO TRIPS Council meeting room The TRIPS Council met from 9-10 June. The next TRIPS Council is scheduled to take place from 15-16 October and expected to reach a decision on both subjects. The exception on pharmaceutical products ends on 1 January 2016, although pharmaceutical products are also covered by a general exception running until 2021. The tenth WTO Ministerial meeting taking place from 15-18 December in Nairobi is also waiting for a recommendation from the TRIPS Council on the non-violation complaints. Informal Consultations on Pharma Extension for LDCs The request by least-developed countries (LDCs) that the TRIPS Council extend a waiver allowing LDCs to abstain from enforcing IP rights on pharmaceutical products was formally discussed at this session of the Council (IPW, WTO/TRIPS, 8 June 2015). The countries are asking that the waiver apply until a country graduates from LDC status. It has been asserted that the TRIPS Agreement states the waiver renewal shall be automatic upon request. Uganda, on behalf of the LDC group, said in their statement that the “current pharmaceutical transition period… is comprised of two WTO decisions.” The first dates back to 2002, addressing pharmaceutical product patent and data protection. The second is a General Council decision addressing market exclusivity rights under TRIPS Article 70.9 [pdf] (Protection of Existing Subject Matter). “This 2002-2016 transition period was specifically without prejudice to the right of LDCs to seek and obtain further extensions,” they said. According to the statement, 48 countries globally are currently considered as LDCs, 34 of which are WTO members. Citing a 2014 WTO market access study, the Ugandan delegate said LDCs share of world merchandise trade in 2014 was 1.24 percent, with a deficit of US$60.6 billion. Although some 46 percent of LDC populations live below the poverty line (US$ 1.25 a day), about 50 percent of health expenditure in LDCs is out of pocket, he said, adding, “LDCs are the world’s most impoverished countries with the weakest technological capacity.” LDCs “face growing burdens of neglected, infectious, and chronic non-infectious diseases,” he said. “Because of market failure in the patent-based innovation system, diseases that mainly affect poor people in lower income countries – so-called neglected diseases, including Ebola – still do not have many treatment options.” At the end of 2013, over 60 percent of the 10.7 million people living with HIV in LDCs “do not have access to antiretroviral therapy,” he said. “The extension of the transition period, therefore, is critical to enable LDCs to be able to import affordable generic medicines as well as to strengthen local production capacity.” The Ugandan delegate said that the 2002 specific pharmaceutical transition period was granted to supplement the general transition period that had been granted to LDCs until 2005. “It was adopted in recognition of the gravity and magnitude of public health challenges afflicting LDCs,” and was much longer than the general transition period at the time. “A specific decision on pharmaceutical products is critical to address the public health needs of LDCs,” said the statement. “Unlike the 2013 extension, which is general, the 2002 pharmaceutical extension specifically mentions that ‘with respect to pharmaceutical products’, LDCs do not have to ‘implement or to apply’ patents or test data protection or ‘to enforce’ such ‘rights’.” On exclusive marketing rights, the Ugandan delegate said they confer patent-like rights and is another form of monopoly. “If LDCs are bound to grant [exclusive marketing rights], the value of a pharmaceutical transition period would be very limited, since access to medicines and other pharmaceutical products could be effectively blocked for at least five years,” he said. According to the statement, the so-called “mailbox obligation” requires LDCs “not recognising pharmaceutical patents at the time of entry into force of the WTO Agreement to create a system for receiving such patent applications to be examined at the end of the transition period.” The mailbox obligation should be waived, in particular because installing a patent filing system “implies considerable financial and administrative efforts that will place additional burdens on vulnerable LDCs.” This mailbox obligation “may also have a chilling effect on generic producers, who may be deterred from investing in generic production of pharmaceuticals, which could in future be patented.” Member State Positions According an LDC source, some 30 countries took the floor on this agenda item, most in support of the extension request. Turkey and Taiwan were supportive of the request but not of an indefinite extension. The United States and the European Union said they would come back to the issue at the next session, said the source. Japan suggested deferring discussion on the extension closer to the date of expiration of the general exemption in 2021, added the source. According to a WTO official, developing countries supporting the request included the Africa Group, South Africa, Cambodia, Tanzania, Mali, Cuba, Brazil, Togo, China, and Uruguay. Norway also supported the LDCs request. Developed country members said that they were in the process of examining the LDC request and were looking forward to discussions with LDC partners in which certain issues could be clarified, according to the WTO official. India, in its statement said TRIPS Article 66.1 (Least Developed Countries Members – 10 years IP enforcement waiver and extension condition) “is mandatory in nature, in that it does not give the TRIPS Council any discretion to deny a request for extension of the transition period or to impose any further conditions on LDCs.” “A specific decision on pharmaceutical product transition period is absolutely critical to provide suppliers, procurers and donors of affordable medicines in LDCs the clarity and certainty to manufacture, export and import generic medicines,” India said. WHO Supportive The World Health Organization spoke in support of the LDCs request yesterday. “Being exempted from granting patents allows least developed countries to either locally produce or to import generic products even when those are still under patent in other countries,” the WHO representative said in his statement. “This can help countries in expanding health coverage by allowing the health sector to rely on more affordable generic suppliers. Being able to do competitive procurement, including from local or foreign manufacturers is in particular important in the area of HIV as well as for the new treatments for highly prevalent conditions like hepatitis,” he said. “The WHO welcomes and supports the LDC request for extension as part of an overall effort to facilitate access to essential medicines in these countries and urges the Council for TRIPS to favourably consider this request.” The LDCs’ request has been supported by several organisations, such as UNAIDS and the United Nations Development Programme (IPW, Public Health, 22 May 2015). It has support from over 140 civil society organisations (IPW, Public Health, 29 May 2015), and the IDA Foundation, a worldwide supplier of essential medicines to low-and medium income countries (IPW, Public Health, 30 March 2015). Non-Violation Complaints According to the WTO, non-violation complaints arise when a government can go to the WTO Dispute Settlement Body even when a WTO agreement has not been violated. “It is allowed if one government can show that it has been deprived of an expected benefit because of another government’s action, or because of any other situation that exists,” the WTO website specifies. “At least two countries (the US and Switzerland) say non-violation cases should be allowed in order to discourage members from engaging in ‘creative legislative activity’ that would allow them to get around their TRIPS commitments,” the web page says. This week, Brazil on behalf of Argentina, Bolivia, Brazil, China, Colombia, Cuba, Ecuador, Egypt, India, Indonesia, Kenya, Malaysia, Pakistan, Peru, Russia, Sri Lanka, and Venezuela submitted a revised version [pdf] of a 2002 document that stated reasons for preventing non-violation complaints under TRIPS. The list is now 17 countries. In its statement Brazil said in 2002 the 14 countries submitting the original document were concerned that the application of such complaints under TRIPS “would raise systemic concerns that could adversely affect not only the IP system, but also the World Trade System and its dispute settlement mechanism.” The 14 countries were Argentina, Bolivia, Brazil, Colombia, Cuba, Ecuador, Egypt, India, Kenya, Malaysia, Pakistan, Peru, Sri Lanka and Venezuela. The document submitted this week states that application of non-violation complaints to TRIPS “raises fundamental concern.” Among the concerns, the document says that the TRIPS is a sui-generis agreement which is not designed to protect market access but to establish minimum standards of intellectual property protection. The introduction of non-violation complaints, the document says, could introduce incoherence among WTO agreements “by allowing something which a WTO Member has agreed to access in one part of the single undertaking (e.g. the GATT or the GATS) to be challenged on the basis that it could nullify or impair benefits in another area (e.g. TRIPS).” GATT is the General Agreement on Trade and Tariffs, and GATS is the General Agreement on Trade in Services. Moreover, it could “upset the delicate balance of rights and obligations in the TRIPS Agreement by elevating private rights over the interests of the users of intellectual property – both within and between countries – and over other important public policy considerations in a manner inconsistent with Article 3.2 [General Provisions] of the DSU [Dispute Settlement Understanding].” In particular, Article 3.2 of the DSU states that “Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.” The document also says that non-violation complaints could infringe sovereign rights “by exposing to challenge any measure that affects intellectual property and that could not have been foreseen at the time of the Uruguay Round.” It would also limit the use of the TRIPS flexibilities, according to the co-signatories. According to the document, non-violation complaints stemmed from “early bilateral trade agreements” and were introduced into the GATT to protect the balance of tariff negotiations by “addressing the misuse of non-tariff and other trade-restrictive measures…” According to sources, many countries supported the document. The United States and Switzerland kept their previous approach, they said. In its statement, Switzerland said non-violation complaints “do not apply to actions or measures taken by a MS [member state] under a flexibility provision as identified and confirmed in the TRIPS Agreement.” Non-violation complaints are “just as in Art. 64 (Dispute Settlement), part of the balance of rights and obligations under TRIPS as agreed among Members in the Uruguay Round.” Non-violation complaints are mentioned in GATT Article XXIII.1 (Nullification or Impairment). TRIPS Article 64 is part of the TRIPS and of the Uruguay Round deal “that all WTO Members subscribed to at the time,” the Swiss delegate said. “The TRIPS Council cannot renegotiate this consensus today questioning whether such complaints are necessary or not,” he said. A United States source also told Intellectual Property Watch that such complaints were part of the TRIPS and should apply. According to sources, the Council took note of the document submitted by Brazil, and Chair Ambassador Abdolazeez Al-Otaibi of Saudi Arabia is expected to conduct informal negotiations until the next TRIPS Council meeting in October to reach a consensual approach. The Indian delegate in his statement said, the ambiguity and lack of clarity that non violation complaints “will usher” in the TRIPS context “will especially affect developing and LDCs severely.” He added: “It would inevitably lead to addition of litigation cost. The vast array of measures that will suddenly be open to potential challenge will be insurmountable. India believes that this is an unnecessary burden that was not intended by the TRIPS agreement.” Financing Innovation Also on the agenda of the TRIPS Council this week was an item put on the agenda on request of the US and Switzerland, co-sponsored by the European Union and Singapore, according to a WTO source. According to sources, several countries presented their views on the matter. According to the WTO official, the US “provided an extensive overview of research and literature showing how IP coupled creativity with the capital necessary to finance innovation.” “Switzerland elaborated on how IP turned intangible assets into property rights. Singapore, the European Union, Korea, Chinese Taipei [Taiwan], Chile and Japan elaborated in detail their domestic programmes to encourage and help small enterprises and innovators to access financing, including by formalizing, assessing and licensing their intangible assets and intellectual property,” said the WTO official. According to sources, India presented a different point of view. It argued that the IP system was not intended to protect only commercial interests or to foster innovation for its own sake, according to the WTO official. India also suggested that a symposium on business models in the pharmaceutical area to be held as part as the trilateral cooperation between the WTO, the World Health Organization, and the World Intellectual Property Organization, according to sources. Brazil and Bangladesh, on behalf of the LDC group, said there could be no “one size fits all” policy regarding innovation in particular because the venture capital reality in least developed countries is different from the one found in developed nations, according to the WTO source. A side event on the subject was co-organised by the US, the European Union and Switzerland on 9 June (IPW, WTO/TRIPS, 9 June 2015). Image Credits: Catherine Saez Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Catherine Saez may be reached at firstname.lastname@example.org."LDC Pharma Extension Request At WTO Yields Support But Needs Further Discussion" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.