US pushes moratorium proposal on TRIPS and public health

by Chakravarthi Raghavan

GENEVA: The United States has presented, with some more restrictive specificity, its earlier moratorium proposal on measures to enable people in countries with insufficient or no pharmaceutical manufacturing capacities to get access to essential drugs at affordable prices from those countries that have the capacity to produce and supply but are precluded under the TRIPS Agreement from exporting.

Before Doha, the US had floated the idea of a moratorium for the least developed countries (LDCs) and other sub-Saharan African countries, trying to head them off from supporting the efforts of developing countries as a whole to get a declaration and decision at Doha for restoring the public-interest balance in the TRIPS regime.

The latest proposal by the US, presented at the TRIPS Council meeting on 25-27 June, has been described by US civil society groups campaigning on these issues and forming a broad coalition, the Health GAP, as a proposal to narrow the scope of the production-for-export solution promised at Doha and as a move creating “a procedural morass leading to mass graves.”

The US proposal has said that the Art. 30 exception route, through an interpretation, should not be taken on the ground that such a use was not intended when TRIPS was negotiated and would “unreasonably conflict with the normal exploitation of a patent or unreasonably prejudice the legitimate interests of the patent owner.” The US promotes the Art. 31(f) (compulsory licensing) route and either a dispute settlement moratorium or waiver of Art. 31(f).

[In a paper for the World Health Organization, “Implications of the Doha Declaration on the TRIPS Agreement and Public Health”, a Third World patent and legal expert, Carlos Correa of the University of Buenos Aires, has explained the problems and complications likely to be involved in the Art. 31(f) route. This approach would entail a three-step process for changing or amending the article, and thus a practical solution may be years away, which does not constitute an “expeditious solution” as called for by the Doha Declaration.

[The three-step process, as Correa says, requires a political decision by the WTO to open up the TRIPS Agreement for renegotiations and approval of the agreed modifications; a second step of a change in the national law of a potential exporting country (to delete the provision inserted in many such laws that the issuance of a compulsory licence is for “predominant” domestic use, and specify as a ground for compulsory licensing the need to address the paragraph 6 situation envisaged by Doha); and, as a third step, the grant in the exporting country of a compulsory licence at the request of an interested party.

[The first step, Correa (a former negotiator for Argentina) says, may encounter political resistance in a country opposed to any part of the agreement. The second step would require actions by national parliaments and involve their generally complex and lengthy legislative processes; and, since the beneficiary of the new law would be viewed as foreign nationals, may not garner sufficient domestic political support. There would also be a third-step requirement of prior negotiations with the rights holder for commercially reasonable terms. The amendment proposal could also involve the payment of double compensation (i.e., in both the exporting and importing countries, since each country would have to issue a compulsory licence) to the rights holder and thus increase costs.

[The Art. 30 approach, on the other hand, Correa says, would avoid two of the three steps and the double-compensation problem. The TRIPS Council could simply provide an authoritative interpretation. Changes to national law to enable an exception would still be required, but once provided in the law, an exception could be invoked without the need to obtain from the government, on a case-by-case basis, a compulsory licence. The only compensation payable would be in the importing country.]

The US proposal, a Health GAP communication said, is one providing some specificities to its earlier communication, but placing pharmaceutical corporations first. The proposal calls for indistinct moratoriums with strict limitations, defining the problem narrowly and giving existing patent holders a major role in the definition of threshold needs. It puts the power to determine whether or not an importing country has the capacity to produce and supply the drugs itself “in the hands of a behind-the-scenes committee which will non-transparently hold the life-and-death decisions in its hands.”

Under the US proposal, the procedural barriers for the poor to access essential drugs have been multiplied; and, at some point, “one has to wonder if the purpose of these procedural hoops is to protect the minor, mostly theoretical interests of Big Pharma and developed countries or whether they are designed to actually watch people die in the treatment queue as Kafkaesque procedures drag on and on and on.”

“At what point will 8,000 deaths a day matter?” asks Brook K Baker of Health GAP.

[Meanwhile, an editorial in the Financial Times, often a leading advocate of corporate interests in trade, has pointed to new research published in the prestigious UK medical journal The Lancet that only 1% of the 1,383 new drugs registered between 1975 and 1999 were dedicated to fighting tropical diseases and tuberculosis that kill millions in Africa alone each year. The FT has also noted that with the African public health expenditure of $6 a head a year (as against $239 in the industrial world), the incentives provided to the pharmaceutical industry have not produced results, since drug companies have no commercial reasons to invest for a non-existent market.

[One answer, the FT suggests, is “to circumvent the market altogether and develop treatments as public goods, not commercial property... not-for-profit programmes could draw on public sector facilities and expertise in a coordinated effort, but would not be guaranteed access to commercial processes or intellectual property.”]

The copy of the US proposal/communication now available shows the US continuing to talk of its commitment to help countries experiencing public health crises to find real and comprehensive solutions to their situations and its support for WTO members’ use of the full flexibility of the TRIPS Agreement to help provide their citizens access to affordable medicines to address these urgent solutions.

The US claims that the situations where there would be a need to act in terms of paragraph 6 of the Doha Declaration were likely to be “limited”, but that the consequences could be serious for developing and least developed countries encountering the problem of insufficient or no manufacturing capacity.

Some of the arguments advanced in the paper for suggesting a “limited” problem suggest a theoretical world removed from reality. For example, the US argues that a country where the particular drug has no patent is free to grant a compulsory licence to import, and the product can be imported from another country where the drug is not patented. It acknowledges, though, that if the import has to be from a country where there is a patent, the other country would have to issue a compulsory licence. But there were enough developing countries with capacity to manufacture, where the product patent does not kick in before 2005, and hence importing from these countries would provide the “expeditious solution” called for by the Doha Declaration.

Though the Declaration has called for an expeditious solution to the grave public-health problems facing countries with “insufficient or no manufacturing capacities”, it has not defined the criteria on capacity; a procedure must be established to clarify which developing country could be considered as having insufficient or no manufacturing capacity.

The US wants the WTO members to agree to set up a mechanism to permit a developing-country member having sufficient manufacturing capacity in the pharmaceutical sector to export the needed pharmaceuticals to a developing or least developed country “that is afflicted by HIV/AIDS, malaria, tuberculosis and other epidemics” and that has “insufficient or no manufacturing capacity.”

A footnote to the US document says that the nature of the mechanism is yet to be determined and could take the form of a moratorium on dispute settlement or a waiver involving TRIPS Art. 31(f) for particular countries, or an interpretation or an amendment.

Health GAP charges that the US envisions a separate panel of WTO decision-makers who are going to approve individual compulsory licensing for each and every manufacturer and for each and every importing country. Thus in addition to the onerous procedural burdens of seeking hundreds of compulsory licences, there will be the additional burden of seeking prior approval, case-by-case, before some kind of a WTO body.

Health GAP points out that though the US has now given up its earlier efforts to identify solutions restricted solely to the LDCs, it is continuing to seek a narrow definition of capacity.

The NGO also charges that the US is rejecting the proactive Art. 30 solution, while its advocacy of a moratorium or waiver on the enforcement of a domestic-use-only compulsory licence is “unspecified and risks being too short.” The US view should also be opposed since it does not help developing countries that have “prematurely and improvidently passed TRIPS-compliant or TRIPS-plus patent legislation.” And moratoriums and waivers are irrelevant for the first generation of AIDS medicines already lawfully being produced in India and elsewhere, while the moratoria or waivers might end just when you need them, Health GAP charges. (SUNS5149)

From Third World Economics No. 283 (16-30 June 2002).