7th December 2005

MEMBERS STRIKE DEAL ON TRIPS AND PUBLIC HEALTH; CIVIL SOCIETY UNIMPRESSED

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WTO Members agreed on 6 December 2005 to amend the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) to allow countries with insufficient pharmaceutical manufacturing capacity to import generic versions of drugs still under patent (see BRIDGES Weekly 4 September 2003. WTO Director-General Pascal Lamy hailed it as confirmation that “Members are determined to ensure the WTO’s trading system contributes to humanitarian and development goals.” However, international humanitarian aid group Médecins Sans Frontières (MSF) has warned that the amendment is “based on a mechanism that has failed to prove it can increase access to medicines.”

The mechanism in question is the ‘30 August 2003 Decision’ — a waiver of certain TRIPS obligations that allows countries to export drugs produced under compulsory licence, subject to a large number of conditions in both the exporting and importing country. The Decision’s adoption was accompanied by a statement from the chair of the General Council (’Chair’s statement’) assuring that it would not be misused, for example to divert low-cost medicines into rich country markets. However, even though several would-be exporters, such as Norway, Canada and India have altered their domestic laws to meet the waiver’s conditions, and similar changes are imminent in the EU and Korea, not a single country has used it to import drugs. This is often blamed on the 30 August Decision’s complicated eligibility requirements.

The recent decision, taken first in the TRIPS Council and then in the General Council after several extensions and an elaborate procedural process, directly translates this waiver into a formal amendment to the TRIPS Agreement — the first such change to a core WTO agreement since the organisation came into being in 1995. Notably, the text of the amendment does not mention the Chair’s statement — this had been a key objective for many developing countries, which saw it as a restriction on the waiver. The process followed to amend the agreement, however, arguably establishes the Chair’s statement as legal context for interpreting the amendment in the event of a WTO dispute.

According to WTO rules, the amendment will only enter into force once it is accepted by two-thirds of the Membership. Pending such acceptance — through the respective domestic procedures of some 99 Members — the amendment will not take effect, and the waiver will continue to be the legal basis for any trade in generic drugs produced under compulsory licence.

The agreement comes in the run up to the WTO’s 13-18 December Ministerial Conference in Hong Kong. EU Trade Commissioner Peter Mandelson welcomed it “a first contribution for a Hong Kong Ministerial development package,” saying that “the EU has worked hard for this outcome and welcomes that others have moved to make this possible.”

Deal contains three written aspects…

The amendment, which came after two years of slow-moving debate, includes three main aspects: a five-paragraph ‘Article 31 bis,’ an Annex and an Appendix.

Article 31 bis provides for limited exceptions (”to the extent necessary”) to Article 31(f), which stipulates that products produced under compulsory licence should be “predominantly for the supply of the domestic market of the Member authorising such use,” thus facilitating the export of pharmaceutical products produced under compulsory licence. It provides a similar exemption for countries belonging to regional trade agreements (RTAs), the majority of whose members are least-developed countries, making it unnecessary to issue separate compulsory licences to export to each RTA partner. Article 31 bis also provides for avoiding double remuneration — by both the exporter and the importer — to the patent holders.

Moreover, the new article addresses the issue of “non-violation,” declaring that Members will not launch such complaints — based on the loss of an expected benefit caused by another Member’s actions, even if they do not actually violate WTO law — against measures taken in accordance with the amendment.

The Annex outlines the detailed requirements for eligibility, notification, and control included in the original waiver, while the Appendix details how the ‘absence or insufficiency of manufacturing capacity’ may be factually established.

…and set out the ‘choreography’ of adoption

Members also agreed to a specific ‘choreography’ outlining the procedure through which to amend the TRIPS Agreement. This unusual process established that first, Members would make no statements while the TRIPS Council agreed to send the proposal to the General Council along with the controversial Chair’s statement. Subsequently, in the General Council, the 11 Members who had partially ‘opted out’ of using the 30 August Decision as importers would reiterate in writing or through an additional statement their intention to only use the mechanism in cases of national emergency. Then, immediately before the adoption of the decision by the General Council, Chair Ambassador Amina Mohamed of Kenya would read out the Chair’s statement from 2003.

The significant aspect of this ‘choreography’ is that delegations were as a result unable to make statements on the amendment before it was formally adopted and ‘gavelled’ by Mohamed. Some trade analysts suggest this could mean that, should the amendment ever come to dispute settlement, the Chair’s statement (rather than a cacophony of dissenting views) could come to be seen as providing the main, if not sole, supplementary means for interpreting it — even though it is not in the actual text of the agreement. Previous statements made in the course of the preparation of the 30 August Decision, such as those made in the TRIPS Council prior to and at the time of the adoption of the waiver decision in 2003, were deliberately not reaffirmed, and might thus have minimal interpretative value in case of a dispute.

If the two-thirds requirement is not reached by December 2007 — the deadline for acceptance by Members set by the General Council decision — Members could extend it to a later date. However, so long as the amendment does not take effect, the 30 August Decision waiver will remain operative. This is significant, because the supplementary means for interpreting this Decision, in the event of a dispute, could include not only the Chair’s statement, but also other statements made by Members prior to the Decision’s adoption in 2003. These could include the statement made by the Philippines in the TRIPS Council on 28 August 2003 prior to the final adoption of the 30 August Decision (IP/C/M/41), which questioned several of the assumptions in the Chair’s statement.

Informal consultations at last minute pre-Hong Kong

The amendment was the product of a series of informal and formal meetings held during the past month. Initially these meetings took place only between the African Group and the US, and sometimes the EU, but later on expanded to include other countries that were interested in participating in the process, such as Brazil, India, Hong Kong, and Israel. TRIPS Council Chair Ambassador Choi Hyuck of Korea played an active role in at least some of these meetings (see BRIDGES Weekly 26 October 2005). During these meetings delegations generally agreed that the legal meaning of the waiver should not be changed.

During the formal and informal meetings of the TRIPS Council that took place almost continuously from 29 November - 6 December, the African delegations expressed support for the agreement. Countries including Brazil, Mexico, Bangladesh, the Philippines, Sri Lanka, India, and Thailand expressed support for the amendment in principle, but requested additional time to allow for consultations with their capitals. The decision was finally adopted on the afternoon of 6 December.

A rushed compromise?

What remains unclear is the precise reason for the hurry to finalise the integration of the waiver into the TRIPS Agreement in time for the Hong Kong Ministerial Conference. The waiver itself had no time frame attached to it, and thus there was no particular need to convert it into an amendment at this time. One trade source suggested that since little progress is expected at the summit on issues such as agriculture and non-agricultural market access, developed countries were eager to support the amendment to demonstrate their commitment to a development package in Hong Kong.

The African Group originally claimed that the conditions required by the waiver were too burdensome to be of practical use. In December 2004, it had proposed a ‘lighter’ format of the waiver that received criticism from some developed countries for omitting some aspects of the 30 August Decision (see BRIDGES Weekly, 8 December 2004, http://www.ictsd.org/weekly/04-12-08/story1.htm). It is likely that the African countries had to move away from this proposal in order to find a compromise with the US. Yet, it is notable that the US too moved away from its original demand that the Chair’s statement be part of the text of any amendment.

Civil society sceptical

An MSF press release said that “…the decision shows that the WTO is ignoring the day-to-day reality of drug production and procurement. The amendment has made permanent a burdensome drug-by-drug, country-by-country decision-making process, which does not take into account the fact that economies of scale are needed to attract interest from manufacturers of medicines.” In fact, since the 30 August Decision was taken over two years ago, MSF has been seeking to make use of the mechanism by placing an order with a generic drug manufacturer, and has described the process to be very ‘long’ and ‘resource intensive.’

In a press conference after the adoption of the amendment, General Council Chair Mohamed insisted that even though no country has been able to use it to import medicines, the waiver had been effective, since drug prices have fallen significantly since it was adopted in 2003.

Nevertheless, 31 non-governmental organisations (NGOs) have issued a public statement urging governments to test the mechanism before turning it into permanent law. This group includes national groups, such as Kenya AIDS Intervention Prevention Project Group (KAIPPG), Assessor de comunicação Associação Brasileira Interdisciplinar de AIDS (ABIA) and the Ugandan Treatment Access Campaign, as well as international NGOs such as Oxfam and ActionAid.

The NGO statement can be found at: http://www.cptech.org/ip/wto/p6/ngos12032005.html

ICTSD reporting; “WTO TRIPS Council meeting — Bad deal expected, THIRU BALASUBRAMANIAM (http://fromgeneva.blogspot.com/), 6 December 2005; “External Opposition Rises to TRIPS And Public Health Deal,” INTELLECTUAL PROPERTY WATCH, 6 December 2005; “African Countries Ready to Accept TRIPS and Public Health Deal,” INTELLECTUAL PROPERTY WATCH, 6 December 2005; “WTO OKs measures to improve drug access,” ASSOCIATED PRESS, 6 December 2005; “Amendment to WTO TRIPS Agreement Makes Access to Affordable Medicines Even More Bleak,” MÉDECINS SANS FRONTIÈRES PRESS RELEASE, 6 December 2005.

One response to “MEMBERS STRIKE DEAL ON TRIPS AND PUBLIC HEALTH; CIVIL SOCIETY UNIMPRESSED”

ICTSD • RATIFICATION OF TRIPS HEALTH AMENDMENT LANGUISHES, WITH FIVE MONTHS TO GO 7th February 2009 at 08:32
[...] on a mechanism that has failed to prove it can increase access to medicines” (see BRIDGES Weekly, 7 December [...]