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6.4.5.9 Solutions
The extension given in paragraph 7 must be seen as an opportunity for DCs and LDCs to take advantage of the Declaration and implement new national legislation for pharmaceuticals and patents.
6.5 Paragraph 6 of the Doha Declaration: Production for export under a compulsory licence
Article 31(f) of the TRIPS Agreement stipulates that production under a compulsory licence must be ‘predominantly for the supply of the domestic market’ except when the compulsory licence is granted to remedy an anti-competitive practice (article 31k).478
This restriction limits the quantity of products that can be produced for export. This limitation was a key issue that led to the Doha Declaration because it could render local production of a drug uneconomical for a WTO member, even if – in principle – production was legally permissible under the compulsory licence.
Paragraph 6 of the Doha Declaration reads:
‘We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.’
Ellen F.M.‘t Hoen479 states:
478 Paragraph 6 refers to compulsory licence, but art 31 of the TRIPS Agreement refers to the broader concept of
‘unauthorized use’ which as a practical matter covers both compulsory licences and non-commercial, government use, or ‘crown use’ as it is called in the United Kingdom.
479 See Ellen F.M ‘t Hoen The Global Politics of Pharmaceutical Monopoly Power: Drug Patents, access, innovation and the application of the WTO Doha Declaration on TRIPS and Public Health (2009) 36.
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‘However, the cooperative spirit of Doha quickly evaporated once negotiators were back in Geneva. It took the TRIPS Council nearly two years to reach an agreement to allow the export of medicines produced under a compulsory licence.’
6.5.1 Comments
This paragraph is of major importance in the process of finding a solution to the conflict between patent rights and the right to access to medicines for all, as it addresses a fundamental problem arising from the TRIPS Agreement, ie where a member that has a patent on a medicine cannot find an efficient, affordable, and dependable source of medicines because of restrictions on the manufacture and export of medicines under the Agreement.
If a country does not have the necessary manufacturing capacity to handle a national emergency, the ability to grant a compulsory license does not present an effective solution.
This is of vital importance in the public health arena as countries facing epidemics require access to essential medicine. It is further emphasised by statistics which show that approximately 78 per cent of the countries have either reproductive capabilities only, or no pharmaceutical industry at all.480 Generally this exposes an inadequacy in the TRIPS Agreement as these countries will not be able to exercise the right to grant compulsory licences in light of 31(f) of the Agreement which provides that production under a compulsory licence should predominantly be for the domestic market. The rationale behind this provision is, of course, the territorial nature of patent rights and the injunction on member states to outlaw the circumvention of patent rules. In this vein it would not be in compliance with article 31(f) of the TRIPS Agreement to grant a compulsory licence with the aim of supplying a foreign country. This is also known as the
‘Paragraph-6 problem’481.
Moreover the wording of the paragraph is questionable in that there can be little doubt that countries with no manufacturing capacity, do face difficulties in making effective use of
480 Philip McCalman ‘The Doha Agenda and Intellectual Property Rights, ‘A Study On Regional Integration and Trade: Emerging Policy Issues For Selected Developing Member Countries. (October, 2002 pages 6-9. .Available at http:www.international-food-safety.com/pdf/The%20Doha%20Agenda%20Intellectual%20property%20Rights.pdf
481 Oxfam , TRIPS and Public Health, The Next Battle, London, Oxfam, 2002. .
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compulsory licences. The text, however, only acknowledges that these countries could face difficulties.
The first draft stated:
‘We welcome steps to make available medicines at discounted prices or under aid schemes to developing and least-developed countries to encourage Members to take measures to prevent the diversion of such medicines from those for whom they are intended into other markets’.482
This paragraph was removed in its entirety during the revision of 13 November 2001 and replaced by the final paragraph 6, which must be said to benefit the industrialised world and disadvantage DCs and LDCs facing epidemics of all kinds. The ‘Harbinson Draft on TRIPS and Health’ of 11 October 2001 took things a step further by stating that it would be appropriate for a member to afford every assistance, including supplying a patented product, to another member which declares a state of national emergency. This would have been an adequate solution to the Paragraph-6 problem.483
However, the wording was again changed, and again tipped the balance in favour of the industrialised countries, by providing that rather than affording a solution, an appropriate solution to the problem should be sought by the end of 2002.
6.5.2 Problems
The major problem with paragraph 6 is that countries with no manufacturing capacity cannot use the Doha Declaration because of article 31(f) of the TRIPS Agreement.484 However, there are several other problems arising from this paragraph.
First, the definition of how to determine whether a country lacks domestic capacity to produce pharmaceuticals may be problematic. If this provision is to provide the best possible result, clear criteria should be established. This would exclude the possibility of countries claiming that
482 Harbinson Text 0f October 2001, para 6.
483 See pure.au.dk/portal/files/2036/000136959-136959.pdf
484 Which was, however, also recognised by the Ministerial Conference in Doha.
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another member has sufficient manufacturing capacity, judged solely on, for example, its technical ability. It should be left to the country in question to determine whether it has sufficient production capacity.
Secondly, it appears that even if the problem of domestic capacity could be overcome, finding a suitable source of supply presents problems of its own. This may be attributed to the fact that, as indicated above, approximately 78 per cent of countries have capacity to reproduce only, or have no pharmaceutical industry at all. Until recently it was possible to import generic drugs from DCs which did not offer patent protection, which would in certain instances reduce costs by up to 70 per cent.485 India, formerly the biggest exporter of generic drugs, is now TRIPS-compliant and no longer able to produce and export cheap drugs.486
Thirdly, while paragraph 6 states that compulsory licensing is an effective way of securing access to medicines, this is not always the case. Most DCs and LDCs have no or only limited experience in the use of compulsory licences to address national emergencies, which translates into a lack of the know-how necessary to benefit from the process. This means that issuing compulsory licences may not be as effective a solution as paragraph 6 would appear to imply.
In the fourth place, note should be taken of the incentive structure implied in the paragraph.
Given that any solution will assist in establishing a moderately inexpensive source of supply, the incentive for a domestic industry could most probably be diluted.487
Fifthly, there appears to be a problem when a country has no patent protection for pharmaceuticals, as compulsory licences can only be granted once a patent exists. The wording
485 Oxfam, TRIPS and Public Health, The Next Battle. London, Oxfam, 2002.
486 This opinion is supported by Fatoumata Jawara & Aileen Kwa who agree that the process will be too costly and time consuming for developed countries pursue.
487 This is also suggested by Carlos Correa See ‘Implications of Doha Declaration on the TRIPS Agreement and Public Health (June 2002) Health and Economics and Drugs EDM Series No 12. Available at http://apps.who.int/medicinedocs/pdf/523ole/523ole.pdf Where he stated that there will be no rise in R&D in pharmaceuticals due to recognition of product patents, because development of new chemical entities is outside the reach of local companies in DCs/LDCs, since there are no firms big enough to finance the high costs of pharmaceutical R & D.
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of paragraph 6 is limited to cases where patent protection of pharmaceutical products is in force in the country of import.488
Lastly, the major problem with paragraph 6 is that it does not succeed in bringing any concrete development or solution; it merely makes it clear that the issue of compulsory licensing and patent rights needs to be prioritised in the TRIPS Council’s future negotiations.489
6.5.3 Solutions
Even though several issues surrounding paragraph 6 have been identified above, the most pressing problem must be said to be the injunction to find an expeditious solution which will make the use of compulsory licensing effective. However, the Paragraph-6 problem appears to be purely technical and this implies that a solution should not be inconceivable.490 Prospects for a solution are further enhanced by the fact that that the Declaration acknowledges the needs and problems faced by certain DCs and LDCs.