India: TRIPS: The Post-Doha Divide - Issues for LDCs

Last Updated: 11 January 2005

By Asaf Shamsi, B. Pharm., MBA
Director, International Operations

TRIPs, the intellectual property component of the Uruguay round GATT Treaty, gave rise to an acrimonious debate between the developed countries and less developed countries (LDCs). On one side, business interests in the developed world claimed large losses from the imitation and use of their innovations in LDCs. They also asserted that establishing strong intellectual property rights would actually benefit the developing countries by encouraging foreign investment, the transfer of technology and greater domestic research and development (R&D). On the other side, LDC governments adamantly opposed this view, worrying about the higher prices that stronger intellectual property rights would entail and about the harm that their introduction might cause to infant high tech industries.

No country was more actively involved in opposing this component of the GATT agreement

than India and no part of TRIPs was, and continues to be, more sensitive than product patents for pharmaceutical innovations. The national sentiment on this issue is well captured in an often quoted statement made by Indira Gandhi at the World Health Assembly in 1982:

"The idea of a better-ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death."

What is striking about the original TRIPs debate and the continuing discussions about Pharmaceutical product patents is the divergence between the strength of the claims made by both sides.

Although developing countries have succeeded in getting some concessions with respect to implementation of TRIPs at the Doha Ministerial Meeting, a solution seems to be extremely evasive, so far, even one year after the Doha Declaration.

The World Trade Organisation is hoping to secure an agreement to relax the rules on drug patents as part of the current round of international talks. However, up to as recently as November, 2002, trade ministers have so far failed to reach agreement after almost a year of negotiations.

Numerous experts have warned that millions of people in the developing world will miss out on life-saving drugs if governments fail to strike a deal on cheap medicines.

According to Dr Carlos Correa, a member of the UK government's independent commission on intellectual property rights, there is no easy solution to the problem. He is not really confident that there will be agreement on this before the end of the year, and predicts that the issue will continue to be on the agenda causing very measurable frustration for developing countries. He says that although the simplest and most effective solution would be to allow any country to produce and export generic drugs without restrictions, a clear legal framework is needed.

The TRIPS Agreement allows those Members that did not provide patent protection until January 1, 2005 to implement it. In the interim, under the so-called “mailbox” rule, developing countries are required to establish mechanisms for receiving and preserving priority in regard to pharmaceutical patent applications, and to allowing for the grant of exclusive distribution rights when prescribed conditions are satisfied.

The Doha Declaration on the TRIPS Agreement and Public Health states:

“4. We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the 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. In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.”

Paragraph 4 is stated in terms of an agreement among WTO Ministers acting on behalf of Members. This agreement is most reasonably considered a “decision” of WTO Members under Article IX:1 of the WTO Agreement, and to be the substantive equivalent of an interpretation of the TRIPS Agreement.

The Doha Declaration at paragraph 7 also directed the TRIPS Council to authorize the extension until January 1, 2016 of the transition period for least developed Members (hereinafter “LDCs”) to implement or enforce pharmaceutical patent protection.

The Doha Declaration on the TRIPS Agreement and Public Health mandates that the agreement be interpreted in a manner that supports public health interests and promotes access to medicines for all.  However, notwithstanding the political and legal success it represents for developing WTO Members, the Doha Declaration did not address and resolve many of the significant obstacles the TRIPS Agreement creates regarding access to medicines and vaccines.

There are important lessons to be learnt from the devastating events of September 11 in the United States and the subsequent change in the tide of world affairs.

The fears of further terrorist acts all over the world with biological agents following the September 11 terrorist attacks in the United States have yet again brought under renewed scrutiny a number of vital issues concerning drug patents and regulations that have always been a subject of great concern and controversy, in developed and developing nations alike.

Despite having the capability to meet the unprecedented emergency demand for antibacterial drugs at a fraction of the costs being charged by the patent holders in the United States, pharmaceutical firms in India are precluded from supplying these drugs, and indeed, many others, to the United States and other developed and developing countries where there are perceived threats of such terrorist attacks, as well as other health-related emergency situations, such as the HIV/AIDS pandemic, which have been prevalent for years.

The question is, should overall public interest be compromised to safeguard the interests of patent holders?

Prior to the bioterrorism threat, Frederick Abbott, Professor of International Law, Florida State University, had from time to time asked public audiences to engage in a thought-experiment. What if the President of the United States woke up one morning to find that 10% of the U.S. population was infected with a deadly virus, and was told by advisers that while a treatment existed, a patent on that treatment was held by a French company that refused to make the drug available at prices affordable in the United States? Do you think the President would say, “Well, I suppose we won’t have treatment because we must respect the French patent holder’s interest”? The results to this thought-experiment were self-evident prior to September 2001.

Ciprofloxacin and TRIPS

Those who have been involved in the controversy surrounding the TRIPS Agreement and access to medicines in developing countries found the reaction in the United States and Canada to the recent and ongoing threat of bioterrorism of particular interest. Both the United States and Canada negotiated very substantial discounts off the patent holder’s normal price for a patented essential medicine (ciprofloxacin) under an explicit threat of granting compulsory licenses in the event that satisfactory pricing arrangements were not achieved. In both cases, the government acted promptly following the emergence of a medical threat.

As has already been widely noted, the anthrax threat in the United States, while extremely serious from a public health standpoint, was nonetheless fairly speculative at the time the Secretary of Health and Human Services threatened to grant a compulsory license on the Bayer patent.

TRIPS and HIV/AIDS

The HIV/AIDS pandemic is a present reality, and literally thousands are dying from HIV/AIDS in Africa each day.

Pharmaceutical industry pressure on the government of South Africa, including instigation of pressure from the US Trade Representative and the EU Commission, may have indelibly altered the way in which the HIV/AIDS pandemic in that country has been addressed. The way that the TRIPS Agreement is implemented, and the manner in which it is used by private operators, are critical aspects of reviewing its impact on developing countries.

The case of South Africa  

More than two thirds of all HIV/AIDS patients, i.e. 28 million out of 40 million, live in Africa south of the Sahara. On this continent, AIDS has already replaced wars and malaria as the most frequent cause of premature death. The World Health Organisation (WHO) expects that average life expectancy in Southern Africa will, in the next decade, decrease by 17 years to the age of 43 years, instead of increasing to 64 years. This is why AIDS in Africa is more than a health problem. AIDS signals a real social and developmental crisis.

In addition to preventative measures, South Africa wanted to facilitate the import of reasonably priced, good quality AIDS drugs and to stimulate production of AIDS drugs inside the country. The draft 1997 Medicines Act was intended to enable the government to grant compulsory licences for the production of vital medication. A joint company called Cipla-Medpro, consisting of Cipla and a local firm, submitted an application in South Africa .

The US pharma industry did not like this project. That is why in 1999 the US Government intervened several times against the new patent law in South Africa and threatened massive trade sanctions, a plan which they were eventually forced to abandon when the media reported less about Al Gore’s election campaign, and more about the AIDS conflict with South Africa and Gore’s role in it.

In a parallel move, 39 pharmaceutical multinational companies accused the Government of South Africa to override its patents. The dispute developed to a global debate on fundamental priorities of patents and public health.

On 18 April 2001 the pharmaceutical companies dropped their lawsuit against these provisions. The South African Government acknowledged the TRIPs regime but maintained its legislative proposal and promised to seek the dialogue with industry before issuing compulsory licenses or proceeding to parallel imports. Cipla is about to get the first products registered in South Africa.

The case of HIV/AIDS in India

India, with officially 3.86 million HIV -positive people in the world, is second only to South Africa, which has the highest incidence of the deadly disease.

Cipla Chairman, Dr. Y.K. Hamied, says: “We should face the reality that India adds 3’500 HIV-positive cases every day, and a recent World Bank report says there will be 35 million cases by 2005 in India. This makes something like the recent earthquake in Gujarat look like a tea party.”

Ignorance and poverty are the most important causes of the rapid spread of the virus. There is no cure (yet) for HIV/AIDS. The number of HIV/AIDS deaths has, however, dramatically decreased in the USA and in Europe. For example, in  Switzerland, the number of AIDS deaths annually has dropped from a peak of 686 (1994) to 42 (2000). This must be attributed in the first place to the revolutionary drug combination therapy, which disturbs the life cycle of the HI-Virus, and can prevent the outbreak of AIDS or at least delay it for years. In particular, the transmission of the virus from a mother to her unborn child can be prevented with suitable medication.

However, in India, only 500 of 100 000 HIV/AIDS patients at most are getting medical treatment. Combined with the taboos on discussing sexuality and AIDS, there is a widespread lack of hospitals and clinics, of personnel, of medical equipment, and of drugs. AIDS is particularly common in the lower income groups. A monthly income of less than US$ 100 has to cover the basic necessities of life. There are often two infected persons per family but the savings are hardly sufficient for the treatment of one.

A few years ago, the costs of an individual AIDS-combination therapy in India were, at US$ 8500 per year, prohibitively high. In 1993, Cipla introduced the AIDS drug Zidovudine. Stavudine, Lamivudine and Nevirapine followed. Cipla offered the AIDS drugs significantly cheaper than other companies. This in turn provoked the lowering of prices by the international competitors on the Indian market. In 2001, Cipla offered the anti-retroviral package at US$ 600 per year and patient to all African governments, and at US$ 350 or US$ 1 a day to the non-governmental charity “Doctors without Borders”, as compared with annual costs of more than US$ 10 000 in Europe and the US.

Even at the low price level, purchasing of anti-retrovirals is beyond the budget of most of the developing countries. Indeed, the cost of giving anti-retrovirals to 10% of India’s HIV/AIDS affected would effectively mean spending more than the total health budget of the country.

The dispute in South Africa led to a world wide debate on the balancing of private profits and public health, which culminated in an extension for the least developed countries (LDC) up to 2016 to comply with TRIPs. Non-LDC developing countries like South Africa, Brazil or India will, however, have to comply with TRIPs from 1 January 2005 onwards.  

Few LDCs have capabilities to manufacture these drugs for the treatment of epidemic/pandemic diseases like AIDS. But the deal also does not allow them to import these drugs from the few developing countries that can manufacture generic drugs like India and Brazil.

There has also been a lot of controversy and debate with respect to the definition of LDCs.

Going by the Human Development Report of 2002, India ranks 124th on the Human Development Index. It has been repeatedly questioned as to how such an anomaly can exist with respect to India’s classification being so low in terms of its Human Development Index (HDI), and the fact that it is not treated as a Least Developed Country with respect to implementation of the TRIPs Agreement.

Given the magnitude of the healthcare problems facing India, many have advocated that the rationale for determining the criteria for a country to qualify as a LDC should be re-examined.

"One shoe size cannot fit everybody. We therefore need TRIPs-North and TRIPs-South”, says Cipla's Dr. Y.K. Hamied.

The Doha Declaration, however, does not identify a need to change the TRIPs agreement. In actual practice, the multinational companies have been very quick to challenge the application of the flexibilities built into TRIPs in favour of public health concerns.

Developing countries and LDCs should consider revisiting the position many of them advocated during the GATT Uruguay Round, and propose amendment of Article 27:3(a) of the TRIPS Agreement to allow exception from patenting of public health related inventions, including medicines and vaccines.

Notwithstanding this, developing countries should implement the TRIPS Agreement recognizing that its provisions do not demand excessive levels of protection promoted by only a few OECD countries.  

It is very important to keep in mind that the TRIPs Agreement is flexible and there is room for maneuvering in several important areas such as:

  • Definition of invention;
  • Scope of patentability;
  • Exception of patentability
  • The principle of exhaustion of rights (parallel imports).

From a technical legal standpoint, the actions by the governments of the United States and Canada after the September 11 attacks can be justified under the terms of the TRIPS Agreement.

However, when developing country governments have proposed to use compulsory licensing legislation to provide more affordable access to medicines to address public health crises within their borders, they have come under intense diplomatic and economic pressure from the government of the United States.

Why was the U.S. government willing to threaten to grant a compulsory license for Bayer’s ciprofloxacin patent when it has so steadfastly opposed similar measures by developing country governments?

The WHO has consistently given five messages to highlight public health concerns in using patents for pharmaceuticals:

  1. Patent protection stimulates development of needed new drugs, but countries must ensure a balance between the interests of the patent holders and the needs of society.

  2. The Research & Development priority setting for pharmaceuticals and vaccines does not respond to the needs of the majority of people, therefore public involvement is needed to ensure development of new drugs for certain priority health problems.

  3. Generic competition should begin promptly upon patent expiration.

  4. Preferential pricing is necessary for lower-income countries and should be actively pursued.

  5. Health regulations should not create technical barriers to trade.

However, the TRIPs agreements have resulted in a regime that mirrors, and even extends beyond the provisions of the Paris Convention.

Since the time of implementation of TRIPs, various NGOs and other public interest groups in the United States, Canada, and Europe, have been trying to muster support against TRIPs in its present form. Over a period of time, this support has slowly been growing, as was evident from the failed WTO meet at Seattle. The movement has assumed significant proportions, and is now emerging as a powerful lobby in its own right in these countries.

In the interests of the public at large, all over the world, and also in the interests of the Indian pharmaceutical industry, perhaps the time has come to seriously question the implementation of the TRIPs agreements as envisaged by the powerful lobby groups in the United States, and take proactive action, which may possibly result in opening up of these large and profitable markets to Indian pharmaceutical companies, and, at the same time, also result in protecting the interests of Indian companies in the domestic market. 

The Doha Declaration has set the stage for raising the issue of access to affordable therapies for LDCs.

There is also a lot to be gained if Indian Industry joins hands with many of the international NGOs and special interest groups in their campaign for building a case for making drugs available at cheaper prices not only in the LDCs, but also in the “regulated” markets of the United States, Canada, and the European Union, and perhaps even lobby for the implementation of an international Compulsory Licensing Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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