Concerns Continue Over Generic Drug Seizures As Legality Debates Begin

Developing nations led by Brazil and India, along with public health providers and advocates, this week continue to press strong concern over seizures of legitimate shipments of generic pharmaceuticals destined for poor patients in the developing world. Raising the issue at the World Trade Organization again, they say new research into numerous shipments of legitimate drugs delayed by authorities in the Netherlands have elevated doubts and may mean potentially thousands of patients put at risk.

Brazilian Ambassador to the WTO Roberto Azevêdo told reporters Tuesday that flexibilities developing countries have under WTO rules on intellectual property rights may be “jeopardised,” and that the possibility of a dispute settlement case was not ruled out. He spoke after making a statement to the WTO Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Azevedo said that as many as a dozen developing countries made statements in support of the concerns, and two of those countries spoke on behalf of the African Group and the Least Developed Countries group, each of which have dozens of members.

The European Union, whose anti-counterfeiting policy the Netherlands appears to be following in conducting the seizures, maintained in its statement to the TRIPS Council on 3 March that it remains committed to ensuring access to medicines and that it does not see any conflict with WTO rules and its efforts to catch shipments of counterfeits.

WTO Director General Pascal Lamy on 4 March answered letters of concern sent by 16 public health advocacy groups, replying that the issue “deserves to be adequately addressed” so that the “creation of barriers to legitimate trade in generics is avoided.” Lamy added, according to a copy of Lamy’s reply letter circulated by Knowledge Ecology International, that it was his understanding that the matter was being handled bilaterally and that WTO dispute settlement procedures might not be relevant at this time, though he would “help find a solution” if the disagreement persists.

New research by the Brazilian government into a seized shipment of generic medicines that never reached its destination has increased its apprehensions that a “faulty reading” of the TRIPS agreement could threaten the trade in legitimate, low-cost drugs.

Authorities in the Netherlands, a popular transit country, on 4 December stopped a shipment of containing 500 kilos of losartan potassium, used to treat hypertension, on suggestion from a third party rights holder (US pharmaceutical company Merck, according to several sources) that the drugs were counterfeit.

On 4 March, drug-purchasing mechanism UNITAID said that one of its funded shipments also was recently stopped by Dutch customs authorities, also under the claim that it contained counterfeit goods. The shipment, containing 49 kilograms of abacavir sulfate, a second-line HIV/AIDS medication, do not infringe on IP rights and are not counterfeit, UNITAID said. The group said it is “gravely concerned for the patients who are waiting for these urgently needed medicines” as “interruption in HIV therapy is extremely dangerous and can cause resistance to the medicines.”

The losartan seizure led to outcry by the exporting and importing countries – India and Brazil – over misuse of IP rights to delay the shipment of a drug which is not patented in either. India said at the TRIPS Council that the Dutch action risked undermining “the public health dimension of” the TRIPS agreement and goes “against the spirit of a rules based trading system.”

Brazil’s statement said the seizure was not an isolated incident and that legitimate drugs have been held up in transit over a dozen times. They were unable to provide details of the other cases.

Azevêdo told the press “we strongly contest the legality” of the seizure and that the possibility of a dispute settlement procedure was not ruled out, though it was still “too early to tell.”

Brazil’s statement is available here [pdf]. India’s is available here [pdf].

The European Union, defending the Netherlands, countered that the Dutch actions were both in line with international trade rules and consistent with the Dutch government’s responsibility to protect against poor quality medicines, and ultimately to the benefit of public health in general.

New Chair; Lamy To Oversee GIs, CBD

Also during the 3 March TRIPS Council meeting, Ambassador Karen Tan of Singapore was confirmed as the new chair. She is the permanent representative to both the WTO and WIPO on IP matters, and previously served as Singapore’s Ambassador to the Lao People’s Democratic Republic, and worked at the mission of Singapore to the UN in New York and at the embassy in Paris.

And a prospect may have been created for progress on two IP issues on which a majority of WTO member states have been seeking discussion for months, with the news that the WTO director general will himself chair a meeting with key delegations.

These two IP issues are: a proposal to extend to other goods high-level protection currently enjoyed by geographical indications (product names associated with a particular place and characteristics) on wines and spirits; and a proposal to bring the TRIPS agreement in line with the UN Convention on Biological Diversity, usually by the inclusion of an amendment requiring disclosure of origin of genetic resources used in patent applications.

They have been strategically linked in the past with a third issue, creating a GI register, on which there is a clearer mandate to negotiate. A special session on the GI register was held on 5 March. These IP issues have not seen recorded progress since a draft document on them was released in July 2008.

The GI extension and CBD issues fall under “outstanding implementation issues” under the Doha Round of trade liberalisation talks, and as such had no specific fora set aside in which to address them.

Proponents of discussing them said a stipulation that resulted from a ministerial meeting of the Doha Round – that is, paragraph 39 of the Hong Kong declaration — requires the director general to hold dedicated consultations on such matters. (For more background on this issue, see IPW, WTO, 21 November 2008).

This obligation seems now to have been acknowledged, and sources report the first of these consultations will take place on 11 March, with one source adding that the meeting would be at the “ambassador level.”

Controlling Counterfeit, Or Delaying Generics?

The EU said during the council meeting that it is important for it to “allow the customs authorities to control goods in transit suspected to infringe IP rights so that they can stop the traffic of potentially dangerous products, such as fake medicines, even when the shipments are destined for any country,” according to a copy of the EU statement obtained by Intellectual Property Watch.

Luc Devigne, who was leading the EU delegation, added during a press conference on 3 March that the EU had caught millions of counterfeit pills in 2007, that a third of these were coming from India, and that countries should be “grateful to the EU for saving lives” as not everyone has the capacity to search for dangerous drugs.

But Azevêdo told the press that this was “ex-post rationalisation” and said that the Dutch authorities had no authority to decide if drugs meet Brazil’s regulatory standards, since they were only passing through the Netherlands and not destined there.

Of even greater concern, Azevêdo added, is evidence that the seizure of the medicines may have been done ex officio, rather than at the request of a rights holder, and that there had been a threat to destroy the goods that subsequently caused the exporter to ship them back to India rather than have them continue on their course to Brazil.

The “excessive and inappropriate interpretation of IP rights, granting extraterritorial affects… offends Articles 7 and 8” of TRIPS, the Brazilian statement said. Article 7 says the enforcement of IP rights should be done “in a manner conducive to social and economic welfare” and Article 8 gives members permission to adopt measure to protect public health and nutrition, and other public interest goals.

But the EU said it is acting under rights granted in Article 51, which enables a rights holder to request “suspension by the customs authorities of the release into free circulation of such goods” in the case of suspected counterfeit, though a footnote to the agreement says member states have no obligation to act in the case of goods in transit.

Wider Issues

The India statement on 3 March added that such actions fit into a larger trend that risks upsetting the “delicate balance” between IP rights holders and public policy goals. This “coordinated approach is being witnessed in several international fora,” the statement said, including at the World Customs Organization, the World Health Organization, and the Universal Postal Union “to promote the IP maximalist agenda.”

In particular, the country “note[d] with dismay efforts by some members to link safe and efficacious but low cost generics with counterfeit medicines,” as the latter is “essentially an IPR issue.” The topic of counterfeit has been highly controversial one, most recently at the WHO’s Executive Board meeting in January (IPW, WHO, 27 January 2009). It is expected to remain under debate at the World Health Assembly in May.

The generics shipment issue was previously raised the issue at the WTO General Council in early February (IPW, WTO, 3 February), and also had attracted the attention of 16 public health interest groups, who wrote a letter addressing their concerns to Lamy and WHO Director General Margaret Chan, among others (IPW, Public Health, 1 February).