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As mandated by the Doha Declaration, a solution to the Paragraph-6 problem was expected by the end of 2002. This, however, proved impracticable as consensus could not be reached. One of the main points of conflict was the scope of diseases to be included in the decision. The Chairman’s proposal of 16 December 2002 was consequently blocked by the USA delegation which was unwilling to accept the scope of diseases proposed.491
Abbott and Reichman492 wrote:
‘The waiver decision was a result of long and complex negotiation among a substantial number of interested stakeholders, many of whom had widely different perspectives regarding the optimal outcome. Both the waiver and the Amendment nonetheless represent a formal lowering of intellectual property (IP) protection standards imposed by the TRIPS Agreement. The traditional demandeurs of high standards of IP protection lose something they gained in the GATT Uruguay Round negotiations.’
Finally, on 30 August 2003, a decision was adopted which later became an amendment to article 31 of the TRIPS Agreement.493
6.7 Analysis of the Paragraph-6 problem: Does the Paragraph-6 Decision provide answers to the problems identified during the Doha Declaration on the TRIPS Agreement and public health?
The implementation decision outlines the conditions under which countries with no or insufficient manufacturing capacity can use compulsory licences to import generic medicines,
491 After initially agreeing to do so in the Doha Declaration, the United States, for nearly two years, blocked meaningful efforts to liberalise access to generics and in particular blocked an expeditious and efficient solution to the production-for-export dilemma. These measures include parallel importation, relaxation of the predominantly for domestic use rule in art 31 (f) of the TRIPS Agreement.
492 Note 307 above 932.
493 An Annex to the Decision, provides that LDCs are automatically deemed to have no or insufficient manufacturing capacity in the pharmaceutical sector and provides guidelines to be used by other DCs in establishing that they have no or insufficient manufacturing capacity.
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and makes it possible for countries to waive the provision in article 31(f) of the TRIPS Agreement.494
This waiver can, however, only be used if the purpose of production and exportation is to supply an eligible importing member.495 It therefore appears that the problem has been resolved in that the implementation decision provides a legal framework to ensure that DCs and LDCs can purchase, for example, antiretroviral medicines at affordable prices.496 Generally, even though a legal framework has been created, the practical effect remains illusionary.
6.7.1. Scope of diseases covered
As already indicated, DCs demanded that the solution be applied broadly to diseases and treatments.497 The USA attempted to restrict the scope of the solution to HIV-AIDS, malaria, tuberculosis, and a potentially small group of other infectious diseases, while also seeking to limit the countries that would benefit from the solution.498 At a critical juncture in the negotiations, the EC proposed that the solution be confined to ‘grave’ public health problems, which raised the specter of WTO intervention to determine when a public health problem was serious enough to warrant attention.499
494 As described in WT/L/540 para 1(c).
495 Id para 1(b).
496 This appears to be at least a solution to the para 6 mandate as it would enable any country that has not waived the privilege to issue a compulsory licence for a medicine it could not produce and then seek help from any other country having that capacity that was willing to assist it.
497 ‘Substantive and Procedural Elements of a Report to the General Council under Paragraph 6 of the Declaration on the TRIPS Agreement and Public Health’ “The South African Nonpaper” .Submitted to the TRIPS Council by South Africa 4 November 2002, WTO Ref Job (02)/156. For a list of supporting countries, see Abbott ‘WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health, American Journal of International Law, Volume, 99, 317-358 , at pages 328-329.
498 It is worth noting that the US initially proposed limiting permissible exporting countries, but this was not strongly pursued. Moreover, the US, like the EU, was opposed to allowing use of the presumptively more liberal art 30 approach, as distinct from the presumptively more restrictive art 31 approach.
499 ‘Paragraph 6 of the Doha Declaration on the Trips Agreement and Public Health: Elements for a compromise solution’ reprinted in Inside US Trade as ‘Text :EU TRIPS Paper, 1 November 2002’. The same EC proposal sought to require that formulation of active ingredients into final products was to take place in the importing member if it maintained the capacity for formulation. This would in some cases require territorial division of the manufacturing process in a way that would make little sense from a cost-efficiency standpoint. The EC further sought to require that the patent holder should always have the right to make an offer of products at ‘strongly reduced prices’, which could be rejected on ‘reasonable grounds’. www.europarl.europa.eu/.../EXPO-INTA_ET(2007)381392_EN.pdf.
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Both the Paragraph-6 Decision and the pending 2005 Amendment, establish a broad spectrum of medicines and related supplies that may be supplied under the system.500 Their definition of
‘pharmaceutical products’ refers to products ‘of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Declaration on the TRIPS Agreement and Public Health’.
Paragraph 1 of the Doha Declaration is clear and contains no limitation on the application of the Declaration to specific diseases or medicines. Moreover, ‘pharmaceutical product’ as defined in the Paragraph-6 Decision and 2005 Amendment, expressly covers active ingredients and diagnostic kits used to establish whether pharmaceutical treatments are required. The definition is also broad enough to include vaccines in that vaccines qualify as ‘products of the pharmaceutical sector’.501
6.7.2 Lack of domestic capacity
As we have seen, paragraph 6 failed to define when a country will be regarded as ‘lacking domestic manufacturing capacity’.502 I am of the view that clear criteria are required to guide countries in making this determination.
500 Paragraph 1(a) , implementing paragraph 6 of the Doha Declaration on TRIPS Agreement and Public Health (30 August, 2003), Doc. WT/L/540 (1 September, 2003) [The implementation Decision] ; para 2 article 31bis, WTO General Council Decision of 6 December 2005, Amendment of TRIPS Agreement, WT/L/641, 8 December, 2005, with attachment ‘protocol Ammending the TRIPS Agreement’ (with Annex setting out Article 31 bis ) [hereinafter
‘Protocol of Amendment’ or ‘Amendment’]. Article 31 bis incorporates an “Annex to the TRIPS Agreement”.
Further references to “Annex” herein are to this “Annex to the TRIPS Agreement” incorporated by Article 31 bis.
501The Financial Times and The Wall Street Journal opined, in response to the grant of a compulsory license on Plavix (clopidogrel) by Thailand, that the WTO compulsory licensing rules were never intended to cover conditions such as heart diseases. As noted above, members of the European Commission have expressed similar views.
Although these opinions were offered in the context of Thailand’s use of Article 31 of the TRIPS Agreement, and not the August 30 Decision, they provide continuing evidence that Pharma’s advertising and lobbying influence will seek to distort the plain language of the TRIPS Agreement and Doha Declaration when it suits their purpose.
scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2490&context...
Declaration, the Waiver Decision of 30 August 2003 and the Article 31bis ... A. Adverse Impact of the TRIPS Agreement on the Provision ... of the European Commission have expressed similar views. Although these opinions were offered in the context of Thailand's use of Article 31 of the TRIPS Agreement, and not
502 Under art 31bis, a country must either (1) be an LDC, or (2) make a determination that it has insufficient or no manufacturing capacity for the product in question. Paragraph 2(a)(ii) art 3bis Annex and Appendix to Annex.
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Under paragraph 2(a)(ii) of the implementation decision, it is up to the importing member to establish whether or not it has adequate manufacturing capacity. However, this assessment must be conducted in a way that either establishes that the country has no pharmaceutical capacity, or that the existing capacity is insufficient to meet its needs .503.
This requirement imposes no significant burden on a prospective importing member. When there is adequate domestic capacity to produce the product in a way that would reasonably satisfy the country’s needs, there is no reason to obtain supplies elsewhere. Developing WTO members succeeded on this issue, despite a proposal to divide the API and formulation markets (which might have created significant inefficiencies).504
In conclusion, it appears that the problem regarding the definition of when a country lacks the necessary domestic capacity to produce pharmaceutical products has been resolved in that such a judgment by a member cannot be questioned by another member.505
6.7.3 Finding a suitable source of supply
Another important issue is how the DCs and LDCs with no manufacturing capacity can find an appropriate source of supply, which at first glance seems to have been resolved by the implentation decision. However, in my view this predicament persists, even after the entry into force of the implementation decision. Paragraph-5 Decision indicated above, very few countries will be willing to grant compulsory licences in the face of threats from the USA and the pharmaceutical industry. This means that the countries with insufficient manufacturing capacity will, once again, be forced to attempt to import the product from a country which does not
503 Annex to WT/L/540.
504 The ‘Chairperson’s statement’, indicates that: ‘To promote transparency and avoid controversy, notifications under paragraph 2(a) (ii) of the Decision would include information on how the member in question had established, in accordance with the Annex, that it has insufficient or no manufacturing capacities in the pharmaceutical sector.’
Irrespective of the legal status of the Chairperson’s Statement, this adds nothing material to the Amendment. A statement that the importing country had examined relevant available data would suffice.
www.law.fsu.edu/faculty/profiles/abbott/study_TRIPS.pdf.
505 However, several NGOs fear that the developed countries will try to create a system where the DCs/LDCs will be divided into a system of categories, preventing small DCs/LDCs with manufacturing capacity, but a market too small for manufacturing, from making use of the system.
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provide patent protection, which since the 2005 Amendment entered into force has only been LDCs.
In other words, the problem of finding a suitable source of supply has not been overcome even though the legal framework for doing so is in place.506
6.7.4 Lack of know-how and access to trade secrets
The 2005 Amendment recognises the need to improve pharmaceutical capacity in countries with insufficient or no capacity, and encourages members to ‘use the system in the way which would promote this objective’.507It also includes an ‘undertaking’ by members to address this problem within the framework of article 66.2 of the TRIPS Agreement and related commitments to LDCs.508
Most DCs and LDCs have no or very little experience in the use of compulsory licensing to deal with national emergencies. Consequently they lack the technical know-how and access to the trade secrets necessary to make effective use of the licence.
As the system set out in the implementation decision opens up the possibility of importing generic drugs, it appears that the importing countries in question, will not gain technical know-how or access to valuable trade secrets. In other words, the system would not appear to promote transfer of technology and capacity building509 as countries without the necessary manufacturing
506 This opinion is shared by Erik Alsegard who states that the decision does not solve problems which may still hamper the use of the new rights under the decision. Among other things he states that the developed countries may very well fear threats from the US and therefore decide not to participate in the system. See Erik Alsegard, Global pharmaceutical patents after the Doha Declaration –What lies in the future?, (2004) 1:1 SCRIPTed 12, http://www.law.ed.ac.uk/ahrac/script-ed/docs/doha.asp at page 17.
507 WTO General Council Decision of 6 December 2005, Amendment of the TRIPS Agreement, WT/L/641 8 Dec 2005, with attachment ‘Protocol Amending the TRIPS Agreement’ which includes an Annex setting out art 31bis.
508 The TRIPS Agreement Article 61.2, requires developed country members to ‘provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer’ to LDCs, so that the latter ‘may create a sound and viable technological base’. See Agreement on Trade Related Aspects of Intellectual Property Rights, Marrakesh, 15 April, 1994, repr. In International Legal Materials 33: 1197. The TRIPS Agreement already discussed in chapter 4 of the thesis.
509 As desired in terms of para 7.
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capacity will simply import the product instead of developing a domestic industry.510 At the end of the day the DCs and LDCs will still lack the know-how and access to trade secrets. This will provide little opportunity for the development of their local industries.
6.7.5 The incentive structure
The implementation decision Paragraph-6 Decision has failed to create a source of cheap medicines; it has merely opened the door to medicines cheaper than patented drugs. The fact is that only countries with sufficient manufacturing capacity are in a position to export drugs to members with insufficient manufacturing capacity -- in most cases DCs. This will, of course, for some time create access to medicines at lower prices than under the TRIPS regime, but once Brazil, China and India comply with the TRIPS Agreement, the possibility of importing generic drugs at significantly low prices will no longer exist.
6.7.6 Countries with no patent protection
Compulsory licences can only be issued when a patent exists, and in terms of paragraph 1(a) of the Paragraph-6 Decision implementation decision, a pharmaceutical product is defined as a
‘patented product, or product manufactured through a patented process’. In other words, the system only applies when patent protection is granted, which is not the case in most LDCs.
Consequently, LDCs are unable to make effective use of the system until they have introduced patent protection – in effect in 2021.
6.7.7 No real solution
As discussed above in analysing the Paragraph-6 problem, the Doha Declaration has not succeeded in providing an actual solution. The implementation decision is a response to the instruction to find a solution and as such the mandate has been met. However, considering the issues highlighted so far, the implementation decision has not, in my view, provided the desired
510 Which in the author’s view, seems unrealistic taking the economic situation and the existing manufacturing facilities in DCs/LDCs into consideration.
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result in that it does not appear to provide access to medicines for all. The system established still prevents members from taking the measures necessary to protect public health.511