Making Intellectual Property Rules Fair

Session on Critical Issues Facing the Poor:What Progress has the world made in fulfilling the basic

needs of the poor?

James LoveConsumer Project on Technology

CUTS Partnership Conclave: Governance and its Relationship with Poverty Reduction

13 March 2003

New Dehli, India

Who obtains patent protection?PCT Patent Filings, 2002

  Number% of

Total Cumm %USA 44,609 39.1% 39.1%Germany 15,269 13.4% 52.5%Japan 13,531 11.9% 64.4%UK 6,274 5.5% 69.9%France 4,877 4.3% 74.1%Netherlands 4,019 3.5% 77.7%Sweden 2,988 2.6% 80.3%Korea 2,552 2.2% 82.5%Switzerland/Liechtenstein 2,469 2.2% 84.7%Canada 2,210 1.9% 86.6%       All Developing countries 5,359 4.7% 4.7%

Tim Hubbard’s demand curve problemCost

People treated

Free

Cost + Profit

+ Marketing

+ R&D

Changes in Prices for Fluconazole in Thailand, following the introduction of

competition in 1998

200

6.5

0

50

100

150

200

Thai Baht

Exclusive Marketing Rights After 9 months ofCompetition

Global brainstorming on intellectual property

• Open Source/GPL models for software development

• Peer to peer technologies and social organization models

• UK Commission on Intellectual Property Rights

• TACD IP agenda• Royal Society brainstorming on IPR• OECD IPR studies• US National Academies of Science • US Federal Trade Commission /

Department of Justice hearings on competition and intellectual property.

• MSF Working groups on IPR/DND

• IETF working group on IPR• UNDP Human Development

Report 2001• Blur/Banff discussions on music• Rockefeller Bellagio meetings /

collective management of intellectual property rights

• World Business Council for Sustainable Development Project on Intellectual Property Rights

• Aventis Radical IPR scenarios• Ransom / Matching Funds model• WIPO access to genetic resources /

traditional knowledge and folklore• WHO/Harare proposal

For TRIPS to be fair to the poor, rights to patent owners must be

subject to limitations and exceptions

Under the Present TRIPS Accord there is limited but important flexibility

• WTO member countries may – Set their own standards for novelty and utility

– exclude some inventions under Article 27

– offer limited royalty free exceptions to patent rights under Article 30

– Issue compulsory licenses to patents under Article 31

– Allow for domestic or international exhaustion of rights after sale of product (1st sale doctrine), under Article 6, thereby permitting parallel trade

In 2001 in Doha, the WTO promised its patent rules could

and should protect public health

Paragraph 4 of the Doha Declaration on TRIPS and Public Health

We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all.

In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.

Paragraph 5 of the Doha Declaration on TRIPS

(b) Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.

(c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.

Doha Declaration, Paragraph 6

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.

US, Japan, EU used paragraph 6 negotiations to renegotiate and

undermine Doha Declaration on TRIPSIn order to get consensus on paragraph 6

– US Government seeks to limit scope of diseases• EU proposed list of diseases including AIDS and diseases with little

commercial market, such as yellow fever

– Japan asks for exclusion of vaccines and other technologies– Japan others seek to limit to emergencies only– EU/US/Japan/Canada demand tight restrictions on eligible

countries, excluding nearly every country with any level of economic development

– EU insists on extraordinary complex and costly procedures

NGOs say bad deal on paragraph 6 is worst than no deal

• LDC’s have ignore patents on medicines until 2016, and be source of exports of cheap generic drugs

• Every country can permit exports under Article 31.k of the TRIPS– Possibly under refusal to deal grounds

• Exports can be permitted under Article 30, if allowed by panel– Canadian early working case– European Parliament Amendment 196

The US and EU are hostile to efforts to expand access to medicines

• AIDS: Generic manufacturers cannot achieve economies of sale without access to middle income country markets

• Diabetes: More than 100 persons in developing countries now have diabetes

• Asthma: Common among children in developing countries. Lack of access to best drugs (such as singulair) lead to unnecessary suffering and death

• Cancer: 80 million persons in developing countries lack access to treatment for cancer.

Glivec Story

• Very effective drug• Treats rare forms of leukemia• Developed with significant US government

R&D support• Norvartis charges in as much as $50,000

annual for treatment of chronic condition• National health care systems are bankrupted

by cost of such drugs

Demonstrations in Korea over pricing of Glivec lead to arrests

Korea government is pressured to reject compulsory license

• The Korean Government reached agreement with the United States in 1999 to price new, innovative drugs at the average ex-factory price of A-7 countries – United States, United Kingdom, Germany,

France, Italy, Switzerland, and Japan.

• Europe has also been involved in pressure in Korea over drug prices

US now seeking higher prices on medicines in many trade

negotiations

Developing countries need good rules for compulsory licenses

• Administrative proceedings should be cheap and fast

• Compensation should be predictable and affordable– UNDP royalty guidelines

• Grounds should be straightforward

Access Gap Theory

• If one can establish that there exists a significant gap between those who need medicine and those who actually have the medicine, and– Price is a barrier to access

• It is illegal to refuse to license the patent on a non-exclusive basis at a reasonable royalty

Advantages of Access Gap Theory

• Empirical burden is straightforward– Based upon public health data

• Policy is straightforward, – Mechanism to give effect to “access to

medicine for all” provisions of Doha Declaration

• Exports permitted under Article 31.k of TRIPS

For more information

Consumer Project on Technology

http://www.cptech.org

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