The Interface Between Public Health, Trade & TRIPS: Current Work at the WTO and How it Relates to the Generic Industry

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Edward Hampton
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1 15 th Annual IGPA Conference Kyoto, Japan, 5 December 2012 The Interface Between Public Health, Trade & TRIPS: Current Work at the WTO and How it Relates to the Generic Industry Roger Kampf, WTO Secretariat The views expressed are personal and cannot be attributed to the WTO, its Secretariat, or any of its Member governments. 1

2 I. Introduction: The Interface Between IPRs and Public Health

3 Where Do We Come From: the Interface between IPRs and Public Health Since last decade: Impact of IPRs on innovation of and access to medicines moved to centre of cross-cutting debate between separate policies TRIPS-related issues (as confirmed by Doha Declaration): IPR as an important factor for development of new medicines, but: concerns expressed about effect on prices How best to reconcile the need for incentives to invest in R&D and access to medicines? Importance of flexibilities recognized, but: need to preserve balance of rights and obligations How is optimal balance between IPRs and public health best achieved? TRIPS as part of wider national and international action to address health problems, but: cannot solve issues on its own How to ensure capacity to deal with innovation-access cycle in a holistic manner?

4 From Boundaries to Synergies: Bringing Together Distinct Policies Innovation & public research policies Human Rights International Trade & Domestic Economic Settings Public Health Framework IP Law, Management and Administration Quality, Safety, Efficacy Regulation Access to Medical Technologies

5 An Issue Addressed at Various Levels & By Different Actors Multilateral Framework: WHO WIPO WTO Regional Framework: ARIPO OAPI others Key actors: IGOs Regional Organizations Governments Private Sector Civil Society Free Trade Agreements Domestically: IP policy & strategy Legislation Courts

6 Provision on Patentability Patent term extension Compulsory licensing Exhaustion Test data exclusivity Patent linkage Enforcement Side letter or /reaffirmation of Doha Declaration Key Provisions Affecting Pharmaceutical Sector in Selected FTAs Notified to WTO FTA EFTA - Albania, Chile, Colombia, Egypt, Korea, Peru, Serbia, Singapore, Tunisia, Ukraine (10 in total) Mandatory (7) Optional (2) 5 to 8 years (7) Reasonable period (normally five years) (2) Adequate number of years or financial compensation (1) 4 2 EFTA - Jordan, Morocco EC Turkey, Stabilisation and Association Agreements with FYROM, Albania, Croatia, Montenegro EC Chile, Mexico, South Africa and Association Agreements with Algeria, Israel, Jordan, Morocco, Tunisia, Lebanon (Interim Agreement) EC Cariforum (pending as of 8/2012) Protection of patents on a level similar to that prevailing in the European Patent Convention Level of protection similar to common body of EU legislation and jurisprudence Protection in accordance with highest international standards EC Korea (provisional application) 5 years US - Australia, Bahrain, CAFTA/DR, 8 Mandatory (11) 3 2 Five years (8) Chile, Colombia, Jordan, Korea, Optional (1) Reasonable period Morocco, Oman, Panama, Peru, (normally 5 years) (3) Singapore (12 in total) 6

7 The Generic Industry: An Active User of the IP System As IP rightholder - for example: Trademarks for branded generic products Enforcement of trademarks and other IPRs As voluntary licensee Increased number of voluntary licensing programmes (new / pipeline products, broader range of countries) Different types of partnerships: Extended partnership, including acquisition of shares, right to distribute partner products, acquisition of manufacturing facility by generic partner (ex: GSK/Aspen) One licence agreement to manufacture a single product Reliance on generic companies as distributors (ex: Gilead) Medicines Patent Pool and WIPO Re:Search As compulsory licensee As user of litigation procedures As stakeholder in policy-making process Interest in balanced and well-functioning IP system

8 II. WTO s Mandate and Role in the Pharmaceutical Sector

9 General Overview Trade (rules) intersect with public health objectives in many ways: Positive link: trade - higher living standards improved public health conditions Defensive link: right to take trade-restricting measures to protect public health recognized in all WTO agreements The WTO s role is to: Offer a forum for discussion of the interface between trade rules and public health Settle disputes: Few cases challenged appropriateness of measure chosen to achieve public health objectives, not the right to protect public health Raise awareness and build capacity The WTO s mandate is NOT to interpret TRIPS provisions or to assess use of TRIPS flexibilities 9

10 WTO Is Not Just About TRIPS! (1): Tariffs Growing importance of international trade for supply of public health goods: +12%/year, from 92 bn. USD (1995) to 500 bn. USD (2010) Amounts to 4.2% of global merchandise trade Applied tariffs on health-related products: Affect both access and domestic production Pharmaceutical Sector Initiative (1994) selected WTO Members liberalize markets for >6500 products and ingredients (= estimated 79% of global trade) Sectoral initiative for open access to enhanced health care (2006) For detailed study see WTO Staff Working Paper: More Trade for Better Health? International Trade and Tariffs on Health Products (October 2012) 10

Imports of Health-Related Products: in bn. USD for 2010 Average Annual Growth 1995-2010 A1 - Dosified medicines 202,703 +16.

11 Imports of Health-Related Products: in bn. USD for 2010 Average Annual Growth A1 - Dosified medicines 202, % C2 - Medical equipment 97, % C1 - Hospital inputs 86, % B - General inputs 72, % A3 - Specific inputs 26, % A2 - Bulk medicines 9, % 11

12 Bound vs. Applied Tariffs on Health-Related Products 12

13 WTO Is Not Just About TRIPS! (2): Public Procurement Procurement policies and practices: Maximize competition in procurement process Helps to achieve best value for money The WTO s plurilateral GPA (42 Members): Ensures non-discrimination and transparency Magnitude of health-related procurement: US statistical report (2008): 40 bn. USD for hospitals, 50 bn. USD for health sector in general, 30 bn. USD for goods/services procured by Department of Health EU statistical report (2007): 11 bn. EUR for medical technologies covered by GPA Japan statistical report (2010): 1.8 bn. USD for contracts awarded by MoH Revised agreement signed in

14 Health Sector Coverage by Selected GPA Parties Party Coverage of health-related entities at the central government level Coverage of health-related entities at the subcentral government level Coverage of goods Coverage of health-related services Canada X European Union X Hong Kong, China N/A X Israel X X Japan X X Korea X X Norway X Singapore N/A X Switzerland X Chinese Taipei X United States 14

15 WTO Is Not Just About TRIPS! (3): SPS and TBT Agreements Avoid unnecessary barriers to international trade Human health or safety recognized as legitimate objective Use internationally-established health and safety standards Almost half of the issues raised in TBT Committee relate to human health and safety Directly affects the pharmaceutical sector: Health products, including herbal medicines (regulation and inspection) Medical devices 15

16 Examples from TBT Committee Brazil (2009) European Union (2009) Measure: GMP certificate required when applying for registration of certain health products at ANVISA Objective: Protection of human health and prevention of deceptive practices Concerns (selection): Acceptance of ISO certification as evidence of compliance? Availability of sufficient inspection resources at ANVISA? Measure: imported products, including APIs, required to be produced according to GMP equivalent to those of the EU, confirmed by written declaration of competent authority in exporting country Objective: Prevention of entry into supply chain of falsified medical products Concerns (selection): Unjustifiable burden for competent body in exporting country Acceptance of WHO API GMP certificate? 16

17 WTO Is Not Just About TRIPS! (4): Competition Law and Policy No multilateral framework at WTO, but: Art. 40, 31, 8 TRIPS (anti-competitive practices/ IPR abuse) Article 10bis Paris Convention (unfair competition) Relevant for: innovation and access generic companies (e.g. patent settlement agreements, agreements between generic companies, mergers) Objective: inform regulatory and other policy choices Corrective tool where needed to ensure competition from innovation to delivery Country experiences: South Africa: cases at Competition Authority EU: Commission pharmaceutical sector inquiry 17

18 WTO Is Not Just About TRIPS! (5): Conclusion Many of the other WTO disciplines directly affect the generic pharmaceutical industry, in particular: Bound and applied tariffs Government procurement TBT and SPS etc. Need for generic industry to take a holistic, multidimensional approach, and not to focus exclusively on TRIPS matters 18

19 III. IPRs and Public Health: TRIPS and later instruments

20 The Starting Point: Key TRIPS Provisions (1) Objectives and principles the shoulds under the TRIPS Agreement: Promotion of technological innovation Transfer and dissemination of technology Balanced approach, adapted to domestic policy objectives Patents a wide range of flexibilities: Definition of patentability criteria Disclosure requirement Exclusions Exceptions, including compulsory licences Exhaustion national vs. international: freedom to choose regime which best fits domestic policy objectives Illustrates need to think holistically within and beyond IP system 20

21 The Starting Point: Key TRIPS Provisions (2) Test data mandatory protection against unfair commercial use and disclosure: But: how to protect is not prescribed Application of pro-public health interpretation of TRIPS provisions under the Doha Declaration Enforcement important links to public health: Terminology: what is a counterfeit medicine Guided by objective to achieve a balance: preserve legitimate trade, important safeguards Transition periods for LDCs: 2013 in general: further extension requested by LDCs 2016 in pharmaceutical sector Need to address interface IPRs-public health not new, already recognized by TRIPS

22 The Turning Point: What the Doha Declaration Achieved Guidance: interplay IPRs and health Landmark in WTO and elsewhere Framework for multilateral cooperation Support of countries using TRIPS flexibilities The Doha Declaration 2001 Vision of TRIPS: supportive of balanced framework Clarifies TRIPS flexibilities: CL and exhaustion Extension of LDC transition period to 2016 Adoption of Paragraph 6 System

23 An Additional Flexibility: Para. 6 System Designed to address difficulties of Members with insufficient or no manufacturing capacities in the pharmaceutical sector in effectively using CL: Removes specific legal obstacles: waiver of certain TRIPS conditions otherwise applicable to CL Makes an additional flexibility available: Procedures are designed by national implementing legislation Only applies to narrowly defined circumstances Forms part of wider national/international action Requires further reflection on commercial incentives for generic manufacturers to engage in production First ever amendment proposed to a WTO agreement: Reflects importance that Members attach to intersection between IPRs and public health Has been endorsed by various other UN bodies: e.g.: Element 5.2 of WHO s GSPA-PHI 23

24 IV. Relevant Work in the WTO

25 Discussing and Informing Making available a forum for debate of IP issues: Assessment of LDC priority needs Technology Transfer (to LDCs) Enforcement trends (in-transit generic medicines, ACTA) New directions: Early discussion of draft agreements/legislation: Australia s Plain Packaging Bill for tobacco products Move towards a forum for policy debate - new agenda item on IP and innovation, introduced by Brazil and the US: Concept of innovation vs. invention Evidence for causal connection between IP & innovation Call for a balanced IP regime Recognition that IP policy must form part of wider national innovation strategy, is only one among many factors But not discussed in detail: Test data protection Counterfeit medicines Providing factual information and empirical data

26 Solving disputes (1) Regulatory review exception permitted as limited exception to patent rights (WT/DS114/R) Australia s Plain Packaging Bill (DS434/435/441) raises interesting questions, including for the generic industry: Link with public health debate in general: priority for public health or industrial policy objectives? Can pro-public health measures addressed in Art.8 TRIPS override substantive trademark provisions? Is there a positive right to use a trademark? Burden of proof: what does the defendant need to provide in order to show that use of trademark is not unjustifiably encumbered? Repercussions on open question of application of non-violation and situation complaints to TRIPS?

27 Solving Disputes (2): In-Transit Generic Medicines What happened? Principal measure at issue: EU Regulation concerning customs enforcement of IPRs goes beyond TRIPS requirements, as applicable to goods in transit and patent infringing goods Discussed in TRIPS Council, followed by DS consultations (India, DS408 & Brazil, DS409) Alleged violations include GATT (Art.V), TRIPS (Art.1.1, 7, 8, 31, 41, 42, 51) and Doha Declaration Mostly about cases of alleged patent (and not trademark) infringement in transit country State of play: mutually agreed arrangement in summer 2011 ECJ judgment in December 2011 Commission Guidelines of February 2012 What is the right approach? 27

28 Reviewing the Operation of Para.6 System TRIPS Council looks into narrow and broader aspects (see annual reviews ) Narrow aspects focus on operation of System as such, in particular whether it is delivering effective and expeditious results Broader aspects discussed include: Funding Partnerships Pricing (including transparency mechanisms) procurement practices Competition policies Taxes, tariffs and mark-ups Quality, safety and efficacy Discussion contributes to better understanding of interplay between IPRs and public health 28

29 Intensifying Cooperation Essentially among WHO, WIPO, WTO, but also involving other IGOs Traditional fields of cooperation, in particular through capacity building activities: Example: jointly designed workshops dedicated to the interplay between IPRs and public health Series of joint technical symposia on: Pricing and procurement policies (July 2010) Patent information and Freedom to operate (February 2011) WHO/WIPO/WTO study on Promoting Access and Medical Innovation: Intersections Between Public Health, IP and Trade

30 Trilateral Study (1): Purpose Aims at assisting decision-makers by providing information on: legal and policy options (IPRs: particular focus on options/practices regarding patents) interplay between trade, IP and health rules empirical data Illustrates the need to adopt a holistic approach: from research and discovery to delivery: need to take innovation and access equally into account encompassing health, trade and IP dimensions Forms an integral part of technical co-operation offered by WHO/WIPO/WTO in response to growing and diversified demands strengthening policy coherence

31 Trilateral Study (2): Content Introduction (Chapter I) Need for international co-operation and policy coherence Overview of international key stakeholders Policy Context (Chapter II) Analyses key intersections between innovation & access Provides data on global burden of disease Discusses various dimensions: public health, trade and IP Sets out the economics of innovation and access Innovation Dimension (Chapter III) Describes historical pattern and current landscape of medical R&D Looks at the role of IPRs in innovation cycle Access Dimension (Chapter IV) Sets out WHO access framework for essential medicines Analyses access determinants: Health systems IP system Other trade-related aspects

32 V. Conclusions

33 Trends in the Pharmaceutical Sector Rethinking the business model: How will stronger links between R&D companies and generic manufacturers impact on IP regime? New molecular entities: How will generic industry be affected by significant decline since late 1990s? Patent cliffs: A changing perspective for generic companies? Biologics: Will more complex technologies and higher development costs slow down entry of generics / limit price reductions? Counterfeit medicines: What can the generic industry contribute to minimize the risk, in particular in view of strong reliance on API imports? Domestic IP legislation takes different directions: Is diversity better for business than uniformity of rules? How to handle diversity from the user s perspective? FTAs and non-discrimination principles: What are the implications of existing and future agreements for generic companies?

34 Where Do We Stand? According to progress indicators GSPA-PHI: Coordination of IGO work TRIPS flexibilities in national law IPR application & management capacities Access Policies Techtransfer initiatives/strategies Monitoring & reporting

35 Why WTO Matters to the Generic Industry Clarify TRIPS flexibilities through capacity building activities (example: what is required under Article 39.3 to protect clinical test data) Ensure that legitimate trade can take place (as stipulated in Article 41) Raise and settle sensitive issues (example in transit generic medicines clarify that generics are not counterfeit products warn against dilution of narrow meaning of counterfeiting under TRIPS Agreement) Provide information sources and empirical data to facilitate well-founded decisions and to promote holistic approach (example: trilateral study; notification of legislation, TPR reports) Ensure coherence, co-operation and dialogue at all levels

36 What the Generic Industry Can Do Make constructive contribution to ongoing debate on functioning of the Paragraph 6 System: What is needed to make production under mechanism commercially viable for generic manufacturer? Support the WTO s efforts to promote a balanced IPR regime and a holistic approach, involving all relevant dimensions Actively participate in capacity building activities to share the generic industry s perspective Offer a well-structured interlocutor that can represent the generic industry s common interests at international level

IPRs and Public Health: Lessons Learned Current Challenges The Way Forward

Local Pharmaceutical Production in Africa International Conference Cape Town, 4-6 April 2011 IPRs and Public Health: Lessons Learned Current Challenges The Way Forward Roger Kampf WTO Secretariat 1 Acknowledging