E-drug: African Generic firm Medpro Pharmaceutica on paragraph 6
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[long message]
[Information supplied by James Love <james.love@cptech.org>
http://www.cptech.org/ip/wto/p6/medpro-para6.doc ]
5 December 2002
World Trade Organization
Members of the TRIPS Council
Dear Members of the TRIPS Council:
We are writing on behalf of African generic drug
manufacturers, commenting on the negotiations in the WTO
TRIPS council on paragraph 6 of the Doha Declaration on
TRIPS and public health. We urge the negotiators to adopt a
solution that encourages the further development and growth
of domestic value added companies in Africa, and which
enables competition for the supply of pharmaceuticals,
vaccines, and other health care inventions. We believe a
solution modelled after the European Parliament Amendment
196 is the correct approach for Africa.
The current situation in Africa is that there are a number
of firms that provide some value added elements in the
manufacturing and distribution of medicines and other health
care products. The degree to which a particular firm is
vertically integrated varies from product to product and
firm to firm. In most cases, there are at least some
components that are imported, such as fine chemicals used in
the product, or a firm may use imported bulk formulations or
products. African generics firms also often have a variety
of business agreements, licenses, joint ventures and other
collaborations with foreign firms, including large
multinational firms from the United States or Europe, but
also various generics manufacturers from around the world.
The small but growing African domestic industry actively
seeks foreign investment, and strives to expand its own
value added services. In order to grow, African generics
firms will need to continue to import those components of
products they cannot yet competitively manufacture locally,
and African generics firms will also need an opportunity to
sell in the widest possible markets.
The existence of the African domestic industry today is
dependant upon our ability to import active ingredients and
other components of products from suppliers in Canada,
Europe, Latin American and Asia, and particularly from
countries that traditionally did not patent pharmaceutical
products. The TRIPS agreement will force India, China and
other suppliers of components to issue patents on
pharmaceutical products, and a number of international
developments in global patent policy pose ever-greater
barriers in obtaining the essential inputs needed for the
production of generic medicines. It may be very important
in the future for the domestic Africa medicines industry to
use compulsory licensing to overcome barriers to
competition.
The WTO negotiations over paragraph 6 of the Doha
Declaration call attention to a fundamental flaw in the
TRIPS Agreement that discriminates against countries with
small domestic markets. This is a particular problem for
Africa. Specifically, the TRIPS Agreement allows countries
to issue compulsory licenses to protect the public health
and for other purposes, but restricts such licenses to
"predominately for the domestic market." In practice, few
markets are large enough to justify domestic only
production. The United States, Japan and Europe have huge
domestic markets. Individually no African market is very
large, and the entire continent is smaller than Canada, in
terms of revenues. Thus, a "predominately for the domestic
market" rule, if extended globally, would potentially
cripple the effective use of compulsory licensing in Africa,
for those technologies where economies of scale are
important.
This problem can be fixed if countries that are efficient
suppliers would be permitted to export products to countries
that are not, in the limited cases where the importing
country has issued a compulsory license of where the
importing country does not have a patent. Over time, the
domestic Africa industry would likely be both an importer
and exporter of generic products. It is highly unlikely
that the African domestic industry would be able to
manufacturer every input needed for the African continent,
let along for each individual African country. But it is
realistic and desirable to contemplate a situation where for
some and we hope a growing number of products, Africa
manufacturers could export to each other, or to non-African
markets. Many smaller countries have found that they can
become exporters of medicines and medical technologies, for
at least some products. Thus, the framework needs to be
flexible, on both the importing and exporting side.
This issue was raised earlier in a WTO case involving a
provision in the Canadian law that allowed generic firms to
override patents for purposes of exporting medicines for
foreign drug registrations (WTO DS114/R). In this case,
Canada correctly framed the issue as a problem concerning
the adequacy of the domestic market to support efficient
generic manufacturing. Canada used Article 30 of the TRIPS
agreement to allow its own generic manufacturers to export
products without the permission of patent owners, for the
limited purpose of pre-patent testing and foreign
registration of generic products. More recently, the
European Parliament has proposed an extension of the
Canadian approach to any case where the product is
manufactured for sale in a country that has issued a
compulsory license, or where public health authorities
certify there is no patent in effect. The text of
Amendment 196 of the European Directive on Human Use
Medicines is as follows:
Manufacturing shall be allowed if the medicinal product
is intended for export to a third country that has
issued a compulsory licence for that product, or where
a patent is not in force and if there is a request to
that effect of the competent public health authorities
of that third country.
The Canadian approach for its pre-expiration testing and
registration system and the European Parliament proposal
have been endorsed by a number of generics associations in
Asia, Latin America, Europe and Canada, are consistent also
with recent recommendations and reports by the World Health
Organization, the United National Development Program (UNDP)
and the UK Commission on Intellectual Property Rights, and
have also been backed by a long list of public health,
development and civil society groups, including Oxfam, MSF,
the Health Gap, the Trans Atlantic Consumer Dialogue, the
Consumer Project on Technology, and the Third World Network.
In the current WTO negotiations on paragraph 6 of the Doha
Declaration, the TRIPS council has struggled to find a
consensus on the solution to this problem, but largely
because trade negotiators from the United States, Europe
Union and Japan, bodies with large domestic markets, have
sought a number of highly restrictive conditions on the
solution to the export issue. The issues are complex, but
in general, the problems concern US, EC and Japan efforts to
limit the solution on both the importing and exporting side
to only some countries, some diseases, and some
technologies, and also to create an extensive set of
"safeguards" that would increase its cost, complexity and
political risk of authorizing an export. Our comments on
those issues are as follows:
1. We find it completely unacceptable for the "solution"
to paragraph 6 to be limited to only a handful of diseases
selected by the United States, Europe and Japan as relevant to
Africa. Certainly the health care systems in Africa are under
tremendous stress, and any and all cost saving measures must be
protected.
2. We reject any effort to exclude particular technologies, noting
in particular that vaccines are extremely important for Africa, are
particularly difficult to manufacture, and in many cases, the
manufacture of avaccine will not be practical unless one can export
the product.
3. We reject any limitations on the beneficiary countries, on
either the importing or exporting side. We note that limits on the
OECD imports will prevent African firms from selling products in OECD
country markets, even in cases where an African firm is the
best-qualified and most efficient supplier. There is no reason to
agree to a clearly protectionist system.
4. We ask that the WTO not impose needlessly complex, time
consuming and expensive "safeguard" measures. We argue
further that such measures are unnecessary for the simple
reason that in markets of economic consequence, the sale of
products is already regulated, and patent owners will know exactly
who is selling their products, and may take whatever
measures they need to protect their rights in the country
where the product is consumed. We note also that under the European
Parliament proposal, exports would only be
authorized to countries that have already issued a compulsory
license, noting that patent owners will already be notified of the
license and protected under the general Article 31 safeguards, or in
cases where there is no patent, as certified by a public health
authority. This is sufficient to protect the legitimate rights of
the patent owners, and the additional measures proposed by DG-Trade
are inappropriate efforts to control and undermine the
Africa generics industry.
Yours sincerely
JEROME SMITH
CEO, Medpro Pharmaceutica
Rosen Heights, Pasita Street
Rosen Park
Bellville
Cape Town
7551
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