December text on para 6
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E-drug: CPTech, Oxfam, MSF and HAI to WTO delegates: reject 16
December text on para 6
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[This message is long but it is a great analysis of what is going on.
It is worth keeping for reading thoroughly when you have time. BS]
Letter from CPTech, Oxfam, MSF and HAI to WTO delegates regarding
December 16, 2002 Chairman's Text for "solution" to Paragraph 6 of
the Doha Declaration on TRIPS and Public Health
19 December 2002
Dear Delegate to the WTO:
We are writing to ask that the WTO delegates reject the 16 December
2002 TRIPS Council Chairman's text on the "solution" to paragraph 6
of the Doha Declaration. We do not make this request lightly. Like
others, we expected the WTO negotiations on paragraph 6 to signal a
new sensitivity to public health concerns, and to demonstrate that
the Doha Declaration on TRIPS and Public Health would have tangible
benefits for persons who lack access to medicines. Central to this
promise was the statement, in paragraph 4 of the Declaration, that
the TRIPS Agreement:
can and should be interpreted and implemented in a
manner supportive of WTO Members' right to protect
public health and, in particular, to promote access to
medicines for all.
Paragraph 6 was the unfinished business of the Doha Declaration. It
imperfectly raised a well-known problem in the TRIPS. While the
TRIPS accord permits compulsory licensing of patents for a variety of
public interest objectives, including the protection of the public
health, it's practical use is constrained by Article 31.f of the
TRIPS, which normally limits exports to predominate use in the
domestic market. It is simply economically inefficient to have
domestic production for every medicine a county may need, and there
are also other barriers to local production such as scarce know how,
trade secrets and regulatory barriers. Paragraph 6 of the Doha
Declaration recognized explicitly one aspect of the problems
presented Article 31.f, namely that:
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.
At the outset, public health and development groups urged the WTO
delegates to address the larger issue of the economics of the health
care sector and to craft a "solution" to this paragraph that would
allow the WTO to address the mandate in paragraph 4 of the Doha
Declaration, and to make certain the well known flexibilities that
are outlined in Paragraph 5 of the Declaration are meaningful for the
poor. In this regard, it was noted that only a handful of countries
with large domestic markets could effectively use compulsory
licensing for domestic only production. It was pointed out endlessly
that it was both irrational and unfair that countries with small
domestic markets would not benefit from compulsory licensing in the
same way.
The solution to this problem was well known, and had been presented
to the WTO in 1999 in Seattle. Article 30 of the TRIPS could be
used to allow exports of health care inventions allowing firms to
achieve economies of scale. The case for Article 30 was compelling.
Health Care inventions like medicines, vaccines and many medical
devices are regulated items, and patent owners can easily protect
their legitimate interests in the markets where products are
consumed. If patents exist in the market where products are
consumed, compulsory licenses would have to be obtained,
and patent owners would have all of the existing Article 31 safeguards.
In 2000, a WTO panel in the Canadian "early working" case
(WT/DS114/R) involving pharmaceuticals, held that Canada could freely
export medicines to foreign markets for purposes of foreign
registrations, under Article 30 of the TRIPS. In the Canadian early
working case, the panel cited the Canadian argument that:
Smaller countries that did have generic industries did
not have domestic markets sufficiently large to enable
those industries to operate on an economic scale.
Those industries had to export in order to be able to
manufacture in sufficient quantities to achieve
economies of scale, so that domestic consumers could
receive the benefits of cost-effective generic
products. . . . exceptions that had the effect of
confining all activities to a single country were of
little use to countries that, unlike the United States,
depended on international trade to obtain generic
products.
The case for a more general export provision can plainly be read from
the Canadian early working case. Other governments have also
considered such measures. Representative Sherrod Brown has proposed
in the United States Congress that Article 30 of the TRIPS be used to
permit exports of medicines to address public health emergencies, in
a bill introduced following the United States and Canadian
experiences with Anthrax. On October 23, 2002, the European
Parliament adopted Amendment 196 to the European Medicines Directive.
This amendment provided the precise solution that the TRIPS Council
should have adopted.
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 European Parliament Amendment 196 is only 52 words, but it
provides exactly the correct policy framework to balance the
objectives of Paragraph 4 of the Doha Declaration, while protecting
the legitimate interests of patent owners.
Unfortunately, the WTO negotiations on paragraph 6 took an entirely
different direction. Shortly after the Doha Declaration on TRIPS and
Public Health was adopted, the largest pharmaceutical companies
directed an effort to undermine the Declaration, to divide developing
countries, and to fashion new and dangerous precedents that were
designed to undermine the use of compulsory licensing, even in cases
where there were enormous social costs for not addressing abuses of
patent rights.
We have now a proposed "solution" to paragraph 6 that has few
benefits, diminishes the importance of the Doha Declaration itself,
and which will risks prejudice to other more important strategies to
address the export issue.
Stripped to its core, the 6 December 2002 Motta text would allow
countries to export some medicines to least developed countries, and
to a very small number of developing countries that meet the severe
test set out in the proposed Annex on manufacturing capacity.
Scope of Diseases
The European Union has noted the text has "creative ambiguities," and
one of these is in area of the scope of diseases. Paragraph 1.a
says:
"pharmaceutical product" means any patented product, or
product manufactured through a patented process, of the
pharmaceutical sector needed to address the public
health problems as recognized in paragraph 1 of the
Declaration.
The debate over the scope of diseases has been bitter and offensive.
The notion advanced by the United States, Japan and other countries
that diseases such as cancer, heart disease or asthma do not
constitute public health problems in developing countries is
outrageous. There are also a number of treatments for infections
that would not be included in the proposals to limit the scope to
epidemics. Vaccines were explicitly included in earlier drafts, but
removed after Japan objected on the ground that vaccines technically
are not pharmaceuticals, a concession that is appalling to every
public health expert, and given the well known barriers to domestic
production for vaccines, truly evidence of how far we have wandered
from the patient interest. The current text allows the issues of
scope to be argued later, and undoubtedly will be a basis for US
bilateral pressure on weak countries.
This "creative" effort to narrow the scope of diseases and to raise
doubts about the inclusion of vaccines, or at least to give the
United States government the space it needs to pressure developing
countries on these issues, is a disgrace, and its only redeeming
feature is that the United States was unable to more clearly limit
the scope of diseases and technologies.
Limits on Importing Countries
The new Annex which provides the "Assessment of Manufacturing
Capacities in the Pharmaceutical Sector" will be used to exclude many
non-LDC countries. In earlier drafts there was text to indicate that
the issue of manufacturing capacity would be determined on a medicine
by medicine basis, and there were references to economic issues,
acknowledging at least that the high cost of domestic manufacturing
could be the cited as a rationale for importing medicines. The
current text would automatically allow the LDCs to quality as
importers, but would provide a two-part test for all other countries.
The first test would be a determination that there exists no
manufacturing capacity on the pharmaceutical sector. Very few
countries could meet this test. Certainly South Africa, Kenya,
Ghana, Nigeria, Zimbabwe, Uganda and many other countries have some
manufacturing capacity. The second test, paragraph (ii), requires a
determination that manufacturing capacity is insufficient for
purposes of meeting its needs. Some delegates argue that this will
provides flexibility for a member to consider the economic
feasibility of local manufacturing, but of course, the United States,
Switzerland, Canada and the European Union, countries that seek to
narrow the import eligibility, were successful in eliminating
explicit language on these very points. We are left with what the
United States and others can argue is an engineer's definition of
capacity. They will say that any significant capacity to manufacture
in a country will render a member country ineligible for imports.
PhRMA and its Member country allies will clearly argue that Kenya,
Ghana, Zimbabwe, South Africa, Brazil, Malaysia, Argentina, Chile,
Mexico, the Philippines, and virtually any non-LDC with any amount of
economic development will be excluded as an importer. This issue is
too important to be ambiguous.
This unfortunately is also an area where the Motta text is completely
at odds with the requirement in paragraph 4 of the Doha Declaration
that we seek to implement TRIPS in a manner to "promote access to
medicines for all." The greatest opportunities for extending greater
coverage for medicines exist in the middle-income developing
countries. Brazil has indicated that its current program of universal
access to necessary medicines is not sustainable without the ability
to import cheap medicines, or to creditably use the threat of a
compulsory license to negotiate better prices. Malaysia and Thailand
are considering universal access to HIV medicines, but will not do
this unless they can obtain low prices based upon imported materials.
And there is also a close link between the fate of the middle income
countries and the poorer countries. The existence today of cheap
generic antiretroviral (ARV) drugs is due to the earlier decision by
Brazil to purchase generic AIDS drugs.
The Brazil purchases created a competitive market of generic
suppliers, and this has benefited the poorest countries in Africa.
What the Motta text seeks is to marginalize the generic suppliers by
limiting their market to LDCs only. Had this been the case before,
Brazil would never have been able to offer universal access to HIV
drugs, and Africa and other countries would never have obtained cheap
ARVs. The United States knows this. Switzerland knows this.
Canada knows this. And the European Union knows this. But these
countries have been relentless in excluding the middle- income
countries as importers, in order to protect this market for the
European and North American big pharma companies.
Safeguards
Article 31.f of the TRIPS is 20 words. The Motta "solution" to 31.f
is eight pages. Most of this concerns the extensive "safeguards" the
European Union, Switzerland and others have sought to attach to the
agreement, including paragraphs 2, 4 and 5. None of the provisions
in paragraphs 2, 4 or 5 are necessary or desirable. The TRIPS
already has extensive safeguards for patent owners in Article 31 and
other in other existing TRIPS provisions, and these additional
requirements should be rejected. We are particularly critical the
provisions that raise costs to generic producers, impose costly and
difficult expectations that developing countries will police
diversion, when there is no evidence that generic products have been
diverted in significant amounts to OECD countries, and the provisions
that require the WTO TRIPS Council to be notified of individual
licenses. Once patent owners have their individual licenses sent
directly to the TRIPS council it is a matter of time before those
right owners ask the TRIPS council to resolve disputes regarding
those licenses.
The TRIPS Chair has defended the extensive notice and other safeguard
provisions in part on the basis that transparency is beneficial. In
our view, the transparency for this system should be exactly the same
as it is for the Article 30 and Article 31 exceptions that the North
America and European Countries routinely use, and not something
extraordinary such has been proposed.
Legal Mechanisms
The OECD countries have clearly imposed a non-permanent, litigious,
complex and irrational legal mechanism. There is no benefit except
to big pharma to have requirements for dual compulsory licenses
issued. There is no rational basis for having the compensation
determined in the exporting country, since the most important issue
is affordability in the importing country.
Prejudice to other export strategies.
A big concern is that the Motta proposal may have the practical
effort of prejudicing a county's unilateral efforts to adopt a much
better Article 30 solution, based upon the European Parliament's
Amendment 196. The norms adopted in this proposal will undermine any
national Article 30 approach that works differently.
Opposition for developing country generic industry
Generic industry groups from Africa, Asia and Latin America have all
opposed the approaches outlined in the Motta text. Any "solution"
that does not address their legitimate concerns should be rejected,
since the developing country generics industries will be key to any
solution that
actually works.
Given these and other concerns, we regretfully ask the WTO delegates
to reject the Motta text.
Sincerely
James Love
Consumer Project on Technology
Ruth Mayne
Oxfam International
Ellen 't Hoen
MSF
Spring Gombe
Health Action International, Europe
FMI
James Love CPTech +41.79.569.6022
Ruth Mayne, Oxfam +44.1865.31.2279
Michael Bailey, Oxfam + 44.79.681.96102
Ellen 't Hoen MSF +33.6.2237.5871
Spring Gome HAI +31.20.683.3684
James Love, Consumer Project on Technology
http://www.cptech.org, mailto:love@cptech.org
voice: 1.202.387.8030; mobile 1.202.361.3040
James Love <james.love@cptech.org>
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