Developed countries, dwindling national flexibilities, and access to essential medications during public-health emergencies

Dr Olugbenga Olatunji, Lecturer, The University of Sydney

Photo by Diana Polekhina on Unsplash

In a recently published paper, I historicise the gradual but potent attacks of the developed countries on the breadth and effectiveness of flexible obligations in international patent agreements. Flexibilities are usually included in these agreements to strike a balance between the monopolistic nature of patent rights and the right of states to suspend or abridge them in national interests. The paper discusses this flexibility-winding-back phenomenon through the lens of two treaties – the Paris Convention for the Protection of Industrial Property (Paris Convention) and the Agreement for the Trade-Related Aspects of Intellectual Property Rights (TRIPS). This post summarises the highlights of this paper. Given the currency of this topic, especially in view of the COVID-19 pandemic, a cursory comment is also provided on the recently adopted Decision of the World Trade Organisation (WTO) on improved access to COVID-19 vaccines.

Paris Convention – the ‘draining’ of a hitherto broad flexibility reservoir

The Paris Convention (PC) was adopted in 1883 to regulate industrial property (IP) like patents, trademarks, service marks, geographical indications, utility models, etc. It is pivoted on a tripartite principles of national treatment (NT), priority rights (PR), and common rules (CRs). NT (article 2, PC) requires subscribers to the PC to extend to citizens of other subscribers the same level of IP protection enjoyed by their citizens. PR (article 4, PC) is particularly useful for applicants who intend to protect their IP in multiple jurisdictions, as it allows them a grace period within which to submit applications for the same IP in other jurisdictions without losing the filing date of their first application – the duration of PR depends on the type of IP involved. Lastly, CRs outline principles of general application in respect of each of the IP categories covered in the agreement (e.g., see articles 4, 4bis, 4ter, 4quater and 5).

Two broad heads of patent-related flexibilities in the PC are discussed in the paper. The first and the most comprehensive one is the ‘non-binding’ nature of the PC tripartite principles. This is because these principles (NT, PR, and CRs) are only activated for members who offer protection for any of the IP categories under the PC. This approach is particularly advantageous in that a member may invoke not offering patent protection as a policy tool for expanding national technological base and promoting access to needed medications. Even where patent protection exists, this fluid approach means members could suspend or abridge patent rights to cater to access demands during public health emergencies. The second (equally broad) flexibility is forfeiture/revocation (article 5, PC). PC subscribers are empowered to revoke granted patents for abuses of patent rights like non- or insufficient working of the patents or other anti-competitive practices. This makes sense given one of the oft-cited justifications for rewarding creativities with monopoly rights is to foster industrial development through technical education and technology transfer.

Next, the paper traces the barrage of attacks directed at the broader forfeiture/revocation flexibility incorporated into the original PC (see 3.2). The first stop is the 1900 Brussels Revision which imposed two conditions for using the exception: first, members must wait 3 years post-patent-filing before invoking the flexibility even after non- or insufficient working of the invention had been established; and second, affected patentee must have no justification for not working or for insufficiently working their inventions (see article 2). The 1925 Hague Revision heralded a further tightening of this flexibility by requiring, in addition to the Brussels conditions, that forfeiture/revocation would only be available if the remedy of compulsory licensing (CL) could not resolve an alleged patent abuse (see article 5). In 1934, the London Revision added another condition, to wit, flexibility not to be available unless an alleged patent abuse remains unredressed two years after the grant of CL (see article 5(4)). The 1958 Lisbon Revision completes this process by refining the period within which CL could issue in addition to providing that CL must only be non-exclusive (see article 5(4)).

Cumulatively, all of these revisions decimated the revocation/forfeiture exception as patentees are now allowed to ‘justify’ alleged abuse of patent rights. Interestingly, the developed countries still yearned for more pro-patentee revisions and were only stopped by the increased membership of low-and-middle-income-countries (LMICs) who not only opposed further pro-patentee revisions, but also unsuccessfully pushed pro-access revisions of their own (e.g., see Loughran at 424-31). This stalemate led to a US-championed forum-change to the General Agreement on Tariffs and Trade (GATT) – now the WTO.                          

Transition to GATT, TRIPS, and access concerns

Sections 4, 5, and 6 of the paper examine the behind-the-scenes political intrigues that produced TRIPS as well as potential effects of the new treaty on access. In a nutshell, TRIPS’s structure mirrors that of the PC to the extent that it provides for NT, PR, CRs, and flexibilities. However, one distinction between TRIPS and the PC is that TRIPS exterminates the most consequential flexibility under the PC, namely, deference to members on if and how to incorporate the three pillars of the PC at national level. Hence, TRIPS now requires that all WTO members must entrench in their national laws TRIPS minimum standards, including provisions on enforcements and dispute resolutions. This universalisation of minimum standards is an incredible win for developed countries and their multinational corporations (MNCs) for two reasons: one, it makes it easier for their MNCs to obtain and enforce IP protection in LMICs; and two, with no obligation to exploit patents in countries of grant, it arguably legitimises ‘rent-seeking’ behaviour also in LMICs. It is for these reasons, among others, that TRIPS has been criticised as an impediment to access (e.g., see FM Abbott article).

The above notwithstanding, the paper acknowledges the simultaneous inclusion of flexibilities like parallel importation and compulsory licence in TRIPS. Theoretically, these could be used by members to temperate potential threats that TRIPS may constitute for access. The problem here though is that the freewill of LMICs to utilise flexibilities is tremendously constrained by developed countries, using different political-cum-economic stratagems to thwart their attempts. Apart from political/economic might, developed countries have also deployed Free Trade Agreements (FTAs) to diminish the scope and effectiveness of flexibilities post-TRIPS. FTA IP chapters are notorious for enacting TRIPS-plus obligations – obligations far higher than TRIPS minimum (see section 6). Countries like India, Brazil, Argentina, Thailand, and South Africa (just to mention a few) have been strategically targeted by the US, for example, either for using or attempting to use TRIPS flexibilities (e.g., see Drahos and Braithwaite).

In section 7, the paper identifies four ways through which this continuing attack on national flexibilities could exacerbate the access situation in LMICs, namely by:

  • legitimising external influence in national IP rule-setting (US & EU use trade access to control IP rule-settings in several LMICs);
  • imposing additional constraints on the use of certain flexibilities (e.g., compulsory licence for export and parallel importation);
  • unjustifiably adopting higher IP regime in the mistaken belief that this would foster technology transfer and FDI (e.g., Tanzania and Kenya); and
  • threatening the continued existence of India as the ‘pharmacy of the developing world’ (US has repeatedly placed India on a priority watchlist for using flexibilities, MNCs have developed strategies for challenging legitimate use of flexibilities in India, and a section of the Indian generic industry is becoming exceedingly pro-patent owing to influence from MNC collaborators).         

Postscript: the WTO Decision on improved access to COVID-19 vaccines   

Since early 2020, the world has witnessed a once-in-a-lifetime pandemic which originated in China in December 2019. The resulting shortage of PPEs, ventilators, diagnostics, vaccines, and therapeutics, later complemented by a wave of vaccine nationalism among developed countries, led South Africa and India to submit a proposal in October 2020 to the WTO offering ways out of this access quagmire. This proposal called for a blanket waiver of section 1 (copyright and related rights), section 4 (industrial design), section 5 (patents), and section 7 (protection of undisclosed information) of Part II of TRIPS for 3 years to enable a fast-tracked containment and treatment of COVID-19 infections.

After over 18 months of negotiations, a Decision finally emerged at the Ministerial Conference held in June 2022. Unsurprisingly, this Decision has no scintilla of resemblance to the original proposal from India and South Africa. Instead, it considerably reflects an alternative proposal sponsored by the EU, which identifies the overhauling of TRIPS’s CL framework as the holy grail to improved access for COVID-19 vaccines and therapeutics. It is worth noting however, that though based on the EU proposal, the Decision is narrower in scope. For instance, unlike the EU proposal, the approved Decision will only apply to vaccines, while negotiations regarding diagnostics and therapeutics will follow 6 months from the date of adoption (see paras 1 and 8).

The Decision’s substantive provisions may be grouped into three: the first refines TRIPS provisions on article 31 CL by removing the need for prior authorisation under article 31(b) and re-defining adequate remuneration under article 31(h) (paras 3a and 3d). In the second group are provisions focused on addressing some of the criticisms raised against article 31bis (CL for exports). These provisions clarify the circumstances for waiving TRIPS article 31(f) (para 3b); the re-exportation of imported vaccines (para 3c); and the timing of communication of actions under the Decision to Council for TRIPS (para 5). The last group of provisions addresses the issue of duration (5 years, though extendable) (para 6), and the problem associated with access to test data where CL has been granted under articles 31 and 31bis (para 4).       

In retrospect, the process that produced this Direction confirms how emboldened the developed countries have become, not only in attacking national flexibilities pre-TRIPS, but also in manipulating LMICs to ‘voluntarily’ surrender flexibilities. As explained in the paper, this domination is heightened by the successful linkage of trade and IP under the WTO, such that developed countries can now use trade access as a carrot-and-stick instrument to reward cooperating LMICs (increased trade access) or punish recalcitrant ones (withdrawal of trade access). This seems to explain why the India-South Africa proposal did not see the light of the day (in whole or in part) despite the tremendous supports it garnered within and outside the WTO. It also seems to explain why LMICs with capacity to manufacture COVID-19 vaccines would agree to undertake not to use the Decision, even though the Decision is intended to benefit all LMICs (see footnote 1 of the Ministerial Decision).                      

Moving forward despite dwindling flexibilities

It is indisputable that there is no quick fix to the ubiquitous conundrum of inadequate access, especially during a deadly pandemic like COVID-19. However, a few potential solutions may be explored. The lead recommendation in the paper is a political one, which makes sense given the political nature of this problem. Thus, since the laws of many LMICs provide for TRIPS flexibilities, they are advised to muster political will to use these flexibilities not minding any threat of economic sanctions from their developed country counterparts. India is a leading example here as it has defied repeated US harassments aimed at preventing it from using flexibilities. Second, while the June Decision falls short of the widely supported proposal, LMICs could still take advantage of the clarified provisions of TRIPS articles 31 and 31bis CLs. This recommendation, however, circles back to the need for LMICs to show unabashed political will to use the Decision. Third, LMICs may also consider the possibility of using the WTO platform to secure an undertaking from developed countries not to interfere in attempts by LMICs to use flexibilities. Lastly, not all countries can or should venture into pharmaceutical production; as such, a specialised agency could be instituted (perhaps, within the WHO) to coordinate the donation of urgently needed pharmaceutical products to these vulnerable countries where patent is not the issue.

UN Secretary-General’s High-level Panel: a bold vision for improving access to essential medicines, or a “deep disappointment”?

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The UN Secretary General’s High-level Panel on Access to Medicines published its final report on 14 September 2016.

It took just two days for the US State Department to dismiss the report in a strongly-worded rebuke.

The Panel’s recommendations cover a wide area, including countries’ use of the flexibilities contained in TRIPS [the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights Agreement] and TRIPS-plus  provisions, incentives for research and development of health technologies, and global governance arrangements for R&D, production, pricing and distribution of medicines and health technologies.

The UN report took place against the background of efforts by US pharmaceutical companies to strengthen IP protection for medicines, including through the (now apparently very dead) Trans Pacific Partnership Agreement.

The Panel, which included Sydney Law School alumnus and former High Court Justice Michael Kirby, was an eminent but mixed group ranging from grassroots HIV treatment activists, former politicians, academics and senior executives of pharmaceutical firms.

Glancing over the biographies of members, you get the feeling that finding a consensus was always going to be a challenge.

Half the Panel members wrote additional commentaries to the Panel’s report, criticising the report for making dubious and unrealistic assumptions, or alternatively, for failing to adopt bolder and more visionary proposals on financing, IP and access (pp 54-63).

Regrettably, the Panel’s report, like the appointment of the Panel itself, has been ignored by Australia’s media.

Australians live in a bubble, protected by the Pharmaceutical Benefits Scheme (PBS) from experiencing the reality of real-world prices for essential medicines.

Under the PBS, patients pay a maximum of $38.30 for medicines listed on the PBS.  “Concessional patients” ie those who hold a pensioner concession, seniors health care or other concession card, pay only $6.20.

Unfortunately, Australia’s much-loved safety net for pharmaceuticals leads to lack of interest in this most pressing of global health issues: how to increase access to medicines at prices that are affordable to those who need them, while ensuring incentives exist for future R&D in health technologies.

Key issues and recommendations

A key argument in the Panel report is that there is an incoherency and imbalance between the right to health and the rules and practice of international trade and intellectual property protection.

For example, while IP rights are enforced by dispute resolution provisions found in WTO agreements, and in bilateral and multilateral free trade and investment agreements, the accountability mechanisms for human rights, including the human right to health, lack precision, legal weight and enforceability (p 8).

The Panel referred to the proliferation of “TRIPS-plus” free trade agreements that require countries to dispense with the flexibilities in TRIPS (see pp 24-25), writing that:

“Political and economic pressure placed on governments to forgo the use of TRIPS flexibilities violates the integrity and legitimacy of the system of legal rights and duties created by the TRIPS Agreement as reaffirmed by the Doha Declaration” (p 8).

The Panel report encourages countries to continue to make full use of TRIPS flexibilities in the spirit of the Doha Declaration, curtailing the evergreening of patents and ensuring that legislative criteria for the award of patents only reward genuine innovations.

The Panel encourages countries to adopt legislation authorising the issuing of compulsory licences, particularly in order to ensure affordable supply of essential medicines.

The Panel also encourages universities and research organisations that hold patents for inventions developed with public funds to prioritise public health objectives over financial returns, including by issuing non-exclusive licences, and participating in public sector patent pools.

The Panel urged governments to review the access to medicines situation in their own countries in light of human rights principles, ensuring that civil society is given the support it needs to submit shadow reports.  According to the Panel, national policy on R&D should be coordinated by an inter-ministerial body to ensure coherence.

Similarly, the Panel recommended that the UN Secretary-General should establish an inter-agency taskforce on health technology innovation and access for the duration of the Sustainable Development Goals (2015-2030).  The Taskforce would oversee the implementation of the recommendations of the High-level Panel and would report annually to the UN Secretary-General.

The Panel saw transparency as a vital accountability mechanism, urging private sector companies to “have a publicly available policy on their contribution to improving access to health technologies”.  The policy should set out timeframes, reporting procedures and lines of accountability, including board-level responsibilities for improving access to health technologies (p 11).

Two further interesting recommendations were that national governments should require manufacturers and distributors of health technologies to disclose commercial in-confidence information to drug regulatory and procurement authorities.  This should include the costs of R&D, production, marketing and distribution of the health technology, as well as the existence of any public funding received by the company during the process of development.

Secondly, the Panel recommended that the World Health Organisation should maintain an accessible, global database showing the prices of patented and generic medicines (and biosimilars) in the public and private sectors of all countries where the medicines are registered.

State Department’s response

In its rebuff to the Panel’s report, the State Department said:

We believe that we can both increase access to medicines and support innovation for the development of new and improved drugs for the world’s most critical health challenges. Indeed, there can be no access to drugs that have not been developed: support for innovation is essential.

No one disputes that the costs of investment in new health technologies can be substantial.

However, the UN Panel pointed to the complexity of the challenge.  In some cases, the problem is that the market for diseases that affect few patients, or disproportionately affect the citizens of poorer countries, is simply inadequate to incentivise the necessary investment.

In 2014, 1.7 billion people in 185 countries were living with a neglected tropical disease.  These diseases account for around 12% of the global burden of disease, yet over the period 2000-2011 only 4% of therapeutic products registered by the European Medicines Agency and the US Food and Drug Administration were for these diseases.

Similarly, antimicrobial resistance is a slowly mounting crisis, yet “only one novel class of antibiotics has been developed in the past 40 years” (p 14).

This state of affairs suggests that it is an over-simplification to simply assert that the answer lies in countries ratcheting up their IP protections in the hope that market forces will fix the problem.

One doesn’t need to deny the value of patent rights and incentives to nevertheless conclude that the system is broken.

It’s impossible to conclude otherwise when millions of the world’s citizens lack the safety net of a PBS, and where access to the medicine they need at real-world prices overwhelms their productive capability.

A substantial literature illustrates that essential medicines remain unaffordable for many people, in many countries of the world; see, for example here, and here.

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