TRIPS amendment on access to cheaper drugs comes into force

The first ever amendment to a multilateral WTO agreement enables affordable versions of patented medicines to be exported to countries lacking the capacity to produce them.

by Kanaga Raja

GENEVA: A protocol amending the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) that would enable developing countries with insufficient or no manufacturing capacities in the pharmaceutical sector to import cheaper generic medicines produced under compulsory licensing finally came into force on 23 January.

In a press release, the WTO secretariat reported that Burkina Faso, Nigeria, Liechtenstein, the United Arab Emirates and Vietnam had notified in recent days that they had ratified the protocol, thus reaching the two-thirds threshold needed to formally amend the TRIPS Agreement.

Under paragraph 6 of the 2001 Doha Declaration on the TRIPS Agreement and Public Health, trade ministers recognized 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.” They instructed the WTO’s TRIPS Council to “find an expeditious solution to this problem and to report to the General Council before the end of 2002.”

Under Article 31 of the TRIPS Agreement on “other use without authorization of the [patent] right holder”, paragraph (f) states that any such use “shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use [emphasis added].”

On 30 August 2003, WTO members agreed to waive the limitation under Article 31(f), and further agreed that the waiver will last until the article is amended.

Paragraph 2 of the 30 August 2003 WTO General Council decision states: “The obligations of an exporting Member under Article 31(f) of the TRIPS Agreement shall be waived with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s)” in accordance with the terms set out in the paragraph.

On 6 December 2005, WTO members agreed to make permanent the August 2003 waiver by incorporating it into the TRIPS Agreement after two-thirds of the members have ratified the protocol of amendment.

The December 2005 General Council decision contains the protocol of amendment, which includes an annex amending the TRIPS Agreement, a new annex to the TRIPS Agreement and an appendix to the annex to the TRIPS Agreement (on assessment of manufacturing capacities in the pharmaceutical sector).

The amendment incorporates a new Article 31bis which contains five paragraphs:

“1. The obligations of an exporting Member under Article 31(f) shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out in paragraph 2 of the Annex to this Agreement.

“2. Where a compulsory licence is granted by an exporting Member under the system set out in this Article and the Annex to this Agreement, adequate remuneration pursuant to Article 31(h) shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.

“3. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products: where a developing or least developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article 31(f) shall not apply to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question.

“4. Members shall not challenge any measures taken in conformity with the provisions of this Article and the Annex to this Agreement under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994.

“5. This Article and the Annex to this Agreement are without prejudice to the rights, obligations and flexibilities that Members have under the provisions of this Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2), and to their interpretation. They are also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the provisions of Article 31(f).”

Statements on TRIPS amendment

Commenting on the amendment, WTO Director-General Roberto Azevedo said: “This is an extremely important amendment. It gives legal certainty that generic medicines can be exported at reasonable prices to satisfy the needs of countries with no pharmaceutical production capacity, or those with limited capacity.

“By doing so, it helps the most vulnerable access the drugs that meet their needs, helping to deal with diseases such as HIV/AIDS, tuberculosis or malaria, as well as other epidemics. I am delighted that WTO members have now followed through on their commitment and brought this important measure into force.”

In a video statement posted on the WTO website, Amina Mohamed, Foreign Minister of Kenya, who was chair of the WTO General Council during the period when the amendment was adopted in December 2005, said: “As important as trade policy is, health and well-being must take precedence.”

“WTO Members recognize this and have proven how seriously they take health issues by ratifying and putting into force an amendment to WTO rules which will facilitate access to essential medicines in low-income countries,” she added.

“This is the first-ever amendment to WTO agreements and now that two-thirds of members of the WTO have ratified it, it will come into force. It has been a long time coming,” she said.

Mohamed added that the concerns held by developing countries were based on their need to ensure adequate flexibility to obtain affordable medicines. She noted that in 2001 WTO members struck a deal which clarified the accords and provided governments in the developing world greater clarity and certainty. But one more element was needed – how to guarantee that countries lacking the capacity to produce generic drugs could still procure them affordably.

In 2003, WTO members agreed that if the importing country could not negotiate the acquisition of patented medicines at affordable prices, these medicines could be produced under licence by drug makers in third countries. “This was a major step and I am proud to say that African countries played a major role in bringing about this agreement,” she said.

“It has taken some time to implement this agreement but now that it is in place, developing country governments have an important tool for obtaining affordable medicines.”

Also in a video statement, Ambassador Modest Mero of Tanzania, Chair of the TRIPS Council, underlined the importance of the entry into force of what is not only the first ever amendment of the multilateral agreements administered by the WTO but also a concrete response by trade ministers to address concerns in the area of public health.

“Given the importance of the TRIPS amendment of the protocol, I call upon countries to turn the page now and to look into ways and means to make this new procurement tool work effectively in practice,” he added.

Margaret Chan, Director-General of the World Health Organization (WHO), welcomed the entry into force of the TRIPS amendment as an additional legal pathway for access to medicines, specifically in countries that have no domestic pharmaceutical manufacturing capacity.

“This entry into force marks the first amendment to any of the WTO multilateral trade agreements since their adoption in 1994. As such, it reinforces the importance of health in the formulation of international trade policies,” she said.

“We are a long way from reaching global equity in access to essential medicines especially at a time when the costs of some new treatments are unsustainable even in the richest countries in the world.”

According to Chan, the factors that stand in the way of universal access to affordable patent and off-patent medicines are multiple and inter-related in complex ways. “Taking full advantage of TRIPS flexibilities is important but not enough to address these complexities. In this era of sustainable development, WHO and its partners are working to improve manufacturing capacity for pharmaceuticals in the developing world especially in sub-Saharan Africa.”

“We are also deeply engaged in finding a model for the fair pricing of pharmaceuticals,” she added. (SUNS8387)

Third World Economics, Issue No. 632, 1-15 January 2017, pp6-7, 12