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Implementation of the WTO Decision on TRIPS and Public

Health

Government of Canada

August 2004

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Background

• Many developing and least-developed countries lack access to affordable pharmaceutical products necessary to respond to public health problems.

• Until August 30, 2003 WTO-TRIPS Agreement required that compulsory licenses only be issued “predominantly for the supply of the domestic market”, thereby limiting the ability to export licensed versions of patented pharmaceutical products.

• The WTO Decision allows its 147 member countries – this is a waiver, not an obligation – to establish compulsory licensing regimes for export of pharmaceutical products to countries that are unable to manufacture them domestically.

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WTO Decision – August 30, 2003• WTO Decision applies to:

– Public health problems especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics;

– Importing countries with insufficient manufacturing capacity.

• Moreover, the WTO states that:– The Decision should not be used to pursue industrial or commercial

policy objectives;– The WTO and the patentee must be notified of any license;– Only the necessary amount of the pharmaceutical product can be

produced, the entirety of which must be exported and be specially marked and labelled;

– Licensees must publicly disclose the quantities and features of the pharmaceutical product;

– Patentees must be compensated.

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Implementation by Canada

• As a major producer of generic drugs, Canada is establishing an international precedent by providing the foundation for a TRIPS compliant compulsory licensing for export regime.

• The regime required amendments to the Patent Act and the Food and Drugs Act.

• The regime won’t be operational until accompanying regulatory changes are in place.

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Challenges in Implementing WTO Decision

• Facilitate access to essential pharmaceutical products as quickly as possible while managing expectations.

• Ensure that the scheme contains sufficient incentives to encourage generic participation while leveraging brand name participation.

• Prevent erosion of patent protection: preserve investment climate and ensure continued introduction of new therapies onto the Canadian market.

• Respect Canada’s other international obligations (i.e. NAFTA), while reflecting as fully as possible the WTO Decision.

• Ensure that exported pharmaceutical products are as safe, efficacious and high quality as drugs for domestic consumption.

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Bill C-9 : Drafting Process

• Officials consulted stakeholders, including brand name and generic pharmaceutical industries and NGOs on the draft Bill.

• All stakeholders wanted specific provisions but supported the overall intent of the Bill:

– Brands wanted: measures to prevent diversion and abuse by importing countries.

– Generics wanted: protection from liability; a streamlined application process; Health Canada to review pharmaceutical products intended for export.

– NGOs wanted: a government commitment to help developing and least-developed countries; no restrictions on non-WTO countries, diseases or pharmaceutical products.

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Bill C-9 : Key Features

• All least-developed countries are eligible importers and developing non-WTO member countries are eligible upon request.

• Every pharmaceutical product on the WHO list of essential medicines that was patented in Canada was “pre-approved” as eligible.

• Health Canada will review all pharmaceutical products for safety, efficacy, quality and distinguishing marks before export.

• An Advisory Committee will be created to recommend additional eligible products to Ministers.

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Bill C-9 : Key Features

• Patentees were given the right to ask the Federal Court to terminate a licence if the licensee has not met the terms and conditions or if diversion has occurred.

• Compensation for the patentee will be paid by the licensee and will be linked to the importing country’s level of development and the value of the contract.

• The regime contains provisions to ensure that companies participating in the regime do so in “good faith” and not for commercial purposes.

• Regime will be reviewed in two years.

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Required Importing Country Information Schedule 2 all LDCs

Schedule 3 WTO members

Schedule 4

WTO & non-WTO

members

Declaration of pharmaceutical product needed & required quantity

Y Y Y

Declaration that product is not patented in importing country or that a compulsory license will be granted

Y Y Y

Declaration of inadequate manufacturing capacity in importing country

N Y Y

Declaration of emergency in importing country

N N Y

Declaration that anti-diversion measures from WTO Decision will be adopted

Y (for non-WTO members)

N Y (for non-WTO members)

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Next Steps

• Bill C-9 received Royal Assent on May 14.

• The accompanying regulations are expected to be finalized later this year.

• Consultations with stakeholders have taken place regarding the proposed Regulations.

• There will be an additional opportunity to comment once the proposed Regulations are published in Canada Gazette, Part I.