Bridges Weekly Trade News DigestVolume 13Number 9 • 11th March 2009

Fight over Generic Drug Seizure Takes Centre Stage at TRIPS Council Meeting

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Developing countries ramped up their criticisms of the EU last week, saying that its recent seizure of a shipment of generic drugs en route from India to Brazil violated trade rules on intellectual property and had significant implications for the availability of affordable medicines in poor countries. 
The criticisms were made at a meeting of the WTO’s Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) in Geneva on 3 and 4 March. Participants at the gathering also broached long-standing disagreements on three issues: extending to all products the strong protection currently accorded to geographical indications of wines and spirits (GI extension); making it mandatory for patent applicants to disclose the origin of any genetic resources and/or associated traditional knowledge involved in their inventions; and the establishment of a register for geographical indications (GIs) of wines and spirits.
Brazil, India sound off on drug seizure
But the most heated exchanges of the meeting concerned the drug seizure, which has been generating controversy since it first made headlines in January (see Bridges Weekly, 28 January 2009,
The tiff began in early December, when Dutch customs officials confiscated 500 kilograms of the drug losartan potassium that was docked in a port in the Netherlands while in transit to Brazil. The Dutch authorities held the shipment for 36 days before releasing it to the exporter, who sent the drugs back to India, where they had been manufactured.
At a meeting of the WTO’s General Council in early February, Brazil and India chastised the EU for confiscating the drugs, which are used to treat high blood pressure, calling the seizure unjustifiable and charging that it had prevented Brazilian citizens from obtaining life-saving medications (see Bridges Weekly, 4 February 2009,

“Measures of this nature have an adverse systemic  impact on legitimate trade of generic medicines, South-South commerce, national public health policies and the principle of universal access to medicines,” the Indian representative told delegates on Tuesday.
Brazil asserted that, far from being an exceptional case, as the EU had argued in front of the WTO’s General Council in February, incidents like the December drug seizure “occur rather frequently.”

The Dutch authorities had no right to seize the drugs, the Brazilian representative said, because the medicine in question is not patent-protected in India, the country of origin, or in Brazil, the shipment’s destination. Whether the drugs were under patent in the country of transit was “utterly irrelevant,” the Brazilian representative said, calling the seizure an “excessive and inappropriate interpretation” of intellectual property law.
“Not only is this a violation of the WTO disciplines, but it runs counter to the spirit of everything developing countries negotiated under TRIPS to get the flexibilities that would allow public health concerns of developing countries to be taken into consideration, to be protected,” Roberto Azevedo, the Brazilian ambassador to the WTO, said after the meeting, Reuters reported.
Brazil had not ruled out bringing a WTO dispute on the matter, Azevedo said.
Several international health NGOs joined Brazil and India in censuring the EU’s actions.
“In order to avoid more wrongful seizures of legal generic medicines in transit through Europe, the European Commission must immediately review and modify its regulation,” Sophie Bloeman from Health Action International said.

She pointed that the EU was demanding similar IP enforcement provisions in its free trade agreements with developing countries. “This could prove to be disastrous for access to medicines in their regions,’’ Bloeman said.
But the EU, stressing that is has long been committed to helping developing countries access low-cost medicines, said that its policies are in line with international rules.
“Many countries actually should be grateful to European customs, who most likely have saved lives and certainly in developing countries, because fake medicines are more spread in developing countries than developed countries,” Luc Devigne,  the top EU official at the meeting, told Reuters. 
Devigne added that the EU’s tight control of drug shipments was fully justified by the “significant and worrying level” of the current trade in illegal medicines. In 2007, Devigne noted, 40 percent of the 76 million counterfeit and pirated goods that were seized by EU customs officials were intercepted in transit. He also emphasised that the Dutch authorities had “temporarily detained” – not seized – the drugs in question.
The dispute highlights a potential rift between WTO rules and EU law. A regulation issued by the European Council in 2003 authorises customs officials “to destroy goods found to infringe an intellectual property right or dispose of them outside commercial channels” without providing compensation “of any sort.” The provision applies even if the goods in question are only in transit through EU territory.
But EU lawmakers, in a letter to the European trade and customs commissioners dated 6 March, called for the existing regulation to be amended to prevent it from “disrupting legitimate trade.” “Seizures of generic drugs within the EU are becoming an increasing widespread problem,” they added, noting that Dutch authorities had seized another shipment of medicines, this time HIV/AIDS drugs en route to Nigeria from India, at Amsterdam’s Schiphol Airport in December.
At the multilateral level, the existing intellectual property architecture (which includes the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS Agreement) holds that patents are territorial and protected according to each country’s national system. Losartan potassium is patented in Europe, where DuPont and Merck Sharp & Dohme own the patent and marketing rights to the drug. But the medicine is not patented in India, where the drugs were manufactured, or in Brazil, where they were to be sold.
A group of NGOs sent a letter to WTO Director-General Pascal Lamy, calling on him to help facilitate a compromise between the opposing parties. 
In a written response delivered last week, Lamy signalled that he would be willing to serve as a mediator in the dispute, should the countries involved ask for his help.
“I understand that the matter is…being further explored at the bilateral level between the Members concerned,” Lamy wrote. “I nevertheless remain ready to help Members who require my assistance to find a solution to a disagreement with other Members, if this disagreement were to persist.”   
Discussion continues on GIs, TRIPS amendment
Moving on to the regular business of the TRIPS Council, delegates discussed a number of issues on which talks have largely stalled recently.

A number of developing and least-developed countries, joined by Switzerland and the EU, emphasised the high and growing support among the WTO Membership for their proposal, presented last summer (in document TN/C/W/52), to establish a GI register, extend GI protections, and adopt an amendment to the TRIPS Agreement to require disclosure of origin requirement (see Bridges Weekly, 23 July 2008,
The EU, supported by Switzerland, pointed out that more than two thirds of WTO Members now support that proposal. Thus, the Council should now move to text-based negotiations, they said.
So far the three TRIPS issues touched on in last summer’s proposal have been discussed separately. Only the register is officially part of the Doha Round ’single undertaking’ at the WTO, but very little - if any - progress has occurred in the talks. Informal consultations on the GI extension and the disclosure requirement have revealed deep divisions on whether negotiations on either area are even necessary.
Tanzania, speaking on behalf of the group of least-developed countries, or LDCs, and Egypt, speaking on behalf of the African group, said that they were disappointed that Members had been unwilling to introduce requirements on disclosure origin, prior informed consent and compliance with access and benefit sharing (ABS) systems into the patent system. Developing countries have long insisted that such provisions are necessary to ensure the equitable sharing of benefits from genetic resources.
The United States, supported by Argentina, Australia, Canada, Costa Rica, Japan, New Zealand and Taiwan, reaffirmed its long-held position that a disclosure requirement would stifle innovation and be ineffective in stopping biopiracy and the misappropriation of genetic resources and traditional knowledge. Thus, there is no need to amend the TRIPS Agreement, they argued; rather, Members should rely on national patent systems once these would be fully installed worldwide.
Moving on to other items on the Council’s agenda, Ukraine provided the Council with an overview of its intellectual property laws; Tonga’s review was postponed to the end of 2009. The review of legislation in Cuba, Fiji, Grenada, Saint Kitts and Nevis, St. Vincent and the Grenadines and Suriname is still outstanding. China notified the Third Amendment of its Patent Law of December 2008, Morocco its new legislation on GIs, and Slovakia as well as Switzerland some amendments to their IP Laws.
The meeting of the TRIPS Council concluded with the nomination of Karen Tan, Singapore’s ambassador to the WTO, as the new chairperson. Tan will succeed the current chair, Denis Francis, the WTO ambassador from Trinidad and Tobago.

ICTSD reporting; “EU, developing states clash over generic drug swoop,” REUTERS, 4 March 2009; “Dutch seizure of HIV drugs highlights patent friction,” THE FINANCIAL TIMES, 4 March 2009.

3 responses to “Fight over Generic Drug Seizure Takes Centre Stage at TRIPS Council Meeting”

  1. Samuel Barns

    The issue of policing generic drug manufacturers to insure quality of the drugs equals that of the original drug is a very real and needed service. If no such measures were in place, what is to keep a generic drug manufacturer from intentionally or unintentionally manufacturing a drug that could potentially kill many.

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