Ecuador To Define Its Compulsory Licence Legislation

Since Ecuadorean President Rafael Correa signed a decree on 23 October allowing compulsory licences, the national intellectual property office has been working on a mechanism for issuing those licences, which should be studied case by case, according to the national decree.

Referring to Article 31 of the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, the Ecuadorean constitution, and the WTO Doha Declaration on TRIPS and Public Health, Correa declared access to essential medicines of public interest to the Ecuadorean population.

Ecuador’s intellectual property office is currently working on legislation for issuing compulsory licences that will be TRIPS-consistent and will respect all of Ecuador’s obligations as a member of the WTO, an Ecuadorean official in Geneva told Intellectual Property Watch.

Article 31 of the TRIPS agreement allows member countries to use patents without the authorisation of the right holders in certain cases such as a national emergency, extreme urgency or for public non-commercial use, although the right holders should be informed in the case of public non-commercial use.

The Doha TRIPS and Public Health Declaration states that TRIPS “does not and should not prevent members from taking measures to protect public health.” The declaration reinforce the right of countries to use the TRIPS flexibilities, including compulsory licensing, and it was agreed that least-developed countries’ exemption on pharmaceutical patent protection would be extended until 2016.

In the past some developing countries using the TRIPS flexibilities have faced strong opposition from the developed country pharmaceutical industry challenging on several occasions the legitimacy of compulsory licences.

The Ecuadorean Institute of Intellectual Property (IEPI) (Instituto Ecuatoriano de la Propiedad Intelectual) will have competency to issue compulsory licences to applicants, based on the legislation, according to the decree, numbered 118. The IEPI will work in coordination with the Ministry of Public Health. The scope, purpose and timeframe of compulsory licences, as well as the amount and conditions of royalty payments will be established by the IEPI, the decree said.

In Ecuador, the average price of a medicine if competition exists is about US$ 3.85, according to the IEPI, but if there is no competition, the average price is $46, not including cancer and AIDS medicine, which are more expensive.

According to an IEPI administrative guide presenting a scenario for the issuance of compulsory licences, in 2002, an Ecuadorean national laboratory asked for a compulsory licence for an anti-retroviral drug (Convivir from GSK), which was usually priced $350 for a month of treatment. Just by asking for a compulsory licence, GSK dropped its prices to $60 a month and the compulsory licence was not issued, it said.

Other countries have sought to issue compulsory licences, according to the guide. For example, Brazil in 2007 issued a compulsory licence for an AIDS treatment. Malaysia also issued a compulsory licence for “government use” for three medicines to treat HIV/AIDS, and started to import generic medicines from India. In Brazil, the costs dropped by 81 percent for patients with HIV/AIDS.

According to this guide, which was drafted as a basis for discussion, between 0.5 and 10 percent of the sale of the generic medicines could be paid as economic compensation to patent holders.

As has been the case in other countries, the decision to issue compulsory licences could prompt pharmaceutical companies to reconsider their prices, the Ecuadorean official told Intellectual Property Watch. But for the moment, nothing has happened, he said, and no companies have come forward.

Compulsory licences also could be issued under the WTO decision of 30 August 2003 on the implementation of paragraph 6 of the Doha Declaration on TRIPS and Public Health, according to the guide.

This WTO decision, which was approved as a permanent amendment to the TRIPS agreement in December 2005 and is awaiting full ratification, allows members who produce pharmaceutical products under compulsory licences to ship a majority of it to developing countries lacking production capacity. Before this, TRIPS said that drugs produced under compulsory licences had to be for “predominately” domestic use.

Some of the medicines under compulsory licences will be manufactured by the Ecuador national manufacturing industry, while others will be imported from other countries, according to the Ecuadorean official.